At Fundsfy we provide our users with unique and very attractive, yet very difficult to access investments. Many of these are structured as what we call Private Funds, which gives you access to interesting investments that are very established among very wealthy people and pension funds. However, most normal people are not familiar with these structures.
That’s why we thought we would write a short note explaining the basics of them.
What are Private Funds
In a Private Fund you are invested with a group of other investors to pool the capital, which allow investors, who would not normally be big enough to invest with the very in-demand professional fund managers, to access their strategies.
Depending on the investment Opportunity, the capital is invested in a fund or project within a defined asset class, such as property (offices, retirement homes, student accommodation, hotels, warehouses, etc.), or one single asset, such as an an energy production facility, toll-road, oil pipeline, or even to buy an entire company.
Private funds are used for investments in infrastructure, energy, real estate, luxury goods and private equity.
Private funds are not listed
Most people are familiar with listed investments, like stocks, bonds and ETF’s that can be traded daily, even every second.
Whilst of course liquid (i.e., they can be ‘traded’), listed instruments are nevertheless exposed to the shifts in the mood of market (‘sentiment’), which can fluctuate wildly, and cause anxiety due to its volatility (we all know that worried feeling from the newspapers and TV, when the markets are flashing ‘red’).
Private investments are not actively traded, nor do they invest in listed instruments, but rather in a tangible, fixed asset, and they are typically held for longer periods (usually between 3-10 years) to develop the investment effectively, and profit optimally.
Why Private Funds
This allows the investment manager to patiently apply their expertise, to extract the full potential of the acquisition or investment. It also means they are not forced to sell at the first sign of market turmoil, but rather be able to manage the investment patiently to preserve capital value and enhance it until the conditions are in place to attain as high a price as possible and provide the maximum return to investors.
In other blogs and on our Descriptions of the different investment Opportunities, you will be able to see how this often translates into better and less volatile returns for investors.