Don’t look now, but private equity is looking to tap into the retail investor market. Looks like they ran out of money on the institutional side—you know, the pensions for firemen, teachers, and police officers. This is all about the sales pitch. But where do you think they’re investing this “alternative” money? What’s clear as day is the lack of transparency. They lock up your money so you can’t get it, and you basically pay them to make sure you’re a long-term investor. I don’t like it.
The WSJ PRO’s Chris Cumming writes:
Private-equity firms are marketing themselves to individual investors as a counterweight to volatile stock markets, arguing their funds perform better during downturns.
But some researchers question this sales pitch, pointing to buyout funds’ high leverage levels and their so-so performance in the most recent recession.
Action Line: Count Your Survival Guy as someone questioning this sales pitch. You deserve better. Let’s talk.
P.S. Heather Gillers and Paul Kiernan report in The Wall Street Journal:
Many pension plans are having a hard time meeting their payout obligations to members, the result of decades of underfunding, benefit overpromises and unrealistic demands from unions. This year’s simultaneous decline in stocks and bonds has only made matters worse. To compensate, many pension plans are increasingly putting their money into private-market investments like hedge funds, private-equity funds and private-debt funds.
Private-fund managers control more than $18 trillion in assets from pension plans, sovereign-wealth funds, endowments, insurers and family offices. They pool investor money and lock it up for years at a time in private-equity funds that buy and overhaul companies, private-debt funds that make loans to companies or other similar investment vehicles. They operate with far less government oversight than publicly traded companies or mutual funds.
Originally posted on Your Survival Guy.