Displaying items by tag: private equity

With market volatility still a concern among clients, private equity firms are positioning themselves as an option for advisors looking to minimize the impact of volatility in their client’s portfolios. Steve Brennan, head of Private Wealth Solutions at Conshohocken, Pennsylvania-based Hamilton Lane, told Financial Advisor magazine, “A benefit to a private equity fund is that it is a long-term investment vehicle that gives an investor an extended period to invest their money and protect it from the turbulence of the markets.” Private equity proponents say that the lower volatility typically outweighs the negatives of private equity, including high fees and illiquidity. Brennan said “The time horizon for investors in the private markets is ... a much longer time period so you’re not seeing the volatility in the private markets that you would see in the public markets.” Alexis Weber, chief investment officer and founder of PM Alpha told the magazine that a client’s private equity allocation should be fluid. He suggested a range of 5% to 20%, but also cautioned advisors that it depended upon the client’s risk tolerance. He also mentioned that private equity can be a benefit to an advisor looking to distinguish themselves from their competitors. He stated, “Really having the right level of allocation to these instruments allows them to differentiate their services and their portfolio construction approach from other peers.”

Finsum:Private equity firms are positioning themselves as an option for advisors looking to minimize volatility for their clients as well as differentiate themselves from their peers.

Alternative investment platform CAIS recently announced that a selection of Reverence Capital’s funds and education courses will be available to RIAs and independent broker-dealers on its platform. Reverence Capital Partners is a private investment firm focused on financial services-focused private equity and structured credit. Mercer will provide third-party due diligence on the funds. As part of the announcement, Milton Berlinski, managing partner at Reverence, stated, “Through our experience across asset and wealth management, we’ve seen the challenges associated with accessing and selecting quality private market products. CAIS is uniquely positioned to provide the technological and educational resources to help tackle these concerns.” The partnership is taking place during an opportune time as a recent CAIS/Mercer study found that approximately 88% of financial advisors intend to increase their allocations to alternative asset classes over the next two years. Matt Brown, founder and chief executive officer of CAIS added, “With allocations to alternatives expected to continue rising in 2023, we believe that adding additional quality alternative products on the CAIS Platform is essential to empowering advisors to gain confidence in meeting client expectations.” CAIS serves more than 7,400 advisory firms and teams overseeing a total of more than $3 trillion in assets. Reverence Capital has about $8 billion in assets under management.

Finsum:With more than 88% of advisors intending to increase their alternative allocations, a selection of Reverence Capital’s funds will now be available to RIAs and independent broker-dealers on CAIS’s alternative investment platform.

While some alternative managers have been benefiting from the market volatility, it’s been a challenging environment for fundraising. In fact, some of the top brand-name firms are having trouble hitting their targets, let alone their hard caps, according to industry insiders. While there are several reasons for this, liquidity issues among limited partners from the "denominator effect" is high on the list. The denominator effect is when volatility in the public markets impacts fundraising in the private markets. It occurs when the value of one portion of a portfolio decreases drastically and pulls down the overall value of the portfolio. Last year, capital commitments were down 1.4% to $497.3 billion as of Dec. 22 compared to $504.3 billion in all of 2021, according to Pensions & Investments data. Private equity was the only alternative category in which both the number of funds and the amount of capital committed increased in 2022. However, fundraising by private equity funds worldwide was down 41.8% year over year in the third quarter of last year based on data from Preqin. According to Adam Bragar, New York-based head of the U.S. private equity practice of Willis Towers Watson PLC, “Whether the slowdown in commitments will continue into 2023 depends on investors' current and projected liquidity.”

Finsum: It’s been a challenging fundraising environment for alternative managers stemming from liquidity issues among limited partners due to the denominator effect.

CAIS, a leading alternative investment platform, recently announced that global private equity firm Warburg Pincus selected CAIS to help expand its reach to independent advisors. CAIS provides financial advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, private credit, real estate, digital assets, and structured notes. Warburg Pincus has more than $85 billion in assets under management and an active portfolio of more than 255 companies. Through the collaboration, CAIS will onboard a selection of Warburg Pincus funds to its platform, where they will be accessible to its vast independent advisory firms and teams. The private equity firm is looking to benefit from CAIS’ data-rich dashboard, which helps measure product interest and engagement from wealth management professionals using the platform. Chip Kaye, CEO of Warburg Pincus had this to say about the collaboration between the two firms, "This partnership helps us introduce our fund strategies to a wider audience of financial advisors and their clients. Having already served the independent wealth management ecosystem for more than a decade, CAIS provides the reach, knowledge, and technology stack required to bridge the gap between alternative asset managers and fiduciary professionals."

Finsum:Warburg Pincus is looking to expand the reach of its private equity funds to independent financial advisors through the CAIS investment platform.

PIMCO recently announced the launch of the PIMCO Flexible Real Estate Income Fund (REFLX). The fund is the firm’s first real-estate-focused interval fund that will invest in public and private markets and will seek to harness the expertise and resources of its $190 billion commercial real estate (CRE) platform. REFLX will have the flexibility to invest in four distinct quadrants of the commercial real estate markets: private equity by acquiring stabilized income-oriented CRE, private real estate loans, public debt such as commercial mortgage-backed securities, and public equity such as REITs. Dan Ivascyn, PIMCO Managing Director and Group Investment Officer and head of the team managing the fund stated, “Higher yields and lower valuations in both public and private markets make for an attractive environment for patient investors ready to deploy funds in a flexible vehicle that can allocate investments across commercial real estate.” Similar to a mutual fund, interval funds are continuously offered. Investors can sell their shares back to the fund, but unlike a mutual fund, they may only be able to do so quarterly through the fund’s periodic repurchase offers.

Finsum:PIMCO adds to its stable of interval funds with the launch of the commercial real estate-focused Flexible Real Estate Income Fund.