A trend in private-equity investing

Being in the business of private investing, there is no shortage on these pages of touting the benefits of private investing, explaining why it’s become more popular, and how it can meet the investment objectives of forward-thinking investors.

So, when we come across news and reports that confirm what we’ve been saying all along, it kind of feels good. For example, according to an article at Bloomberg, private investing, equity, etc., is becoming even more common, and the example of hedge funds is highlighted.

A viable alternative

As some of you know, a hedge fund is essentially a pool of alternative investments. They are often created to provide greater returns than traditional funds while “hedging” against the trends of traditional investments to be found within an investment portfolio.

As with many alternative/private investments, hedge funds can allow certain types of investors, including accredited investors, to avoid some of the regulations and requirements of investments found in the public markets. As a result, a hedge fund can be seen as one big private investment that, in a nutshell, provides all the benefits of private investing: greater returns, manageable risk, less regulation, hedging against market trends, etc.

A growing trend

Specifically, hedge funds and their managers are increasingly turning to private equity in order to achieve greater performance. According to the Bloomberg article, in 2018, hedge funds that are offering or planning to offer private-equity vehicles constitute almost 30% of all hedge funds, which is an increase from under 20% just two years ago.

In addition, venture capital is a particular source of optimism when it comes to utilizing private equity within hedge funds. As cited by Bloomberg, a report by KPMG states that more investors put money in venture funds in the first three quarters of 2018 than in all of 2017.

The reason trends like these occur is because there is a demand for investment performance that exceeds traditional publicly-available securities. Forward-looking investors can look for and anticipate these trends in a way that meets even the most demanding of investment objectives.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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