For decades, investment opportunities for everyday people had been limited to the public market, whereas frequently higher performing private investments were reserved almost entirely for high net worth individuals. Today, thanks to the SEC's recent amendment of Regulation A, as well as alternative investment platforms like Yieldstreet, retail investors now have a variety of options when it comes to accessing the private market.
But while access to the private market has increased, investors still need to do plenty of research to identify opportunities that suit their individual ambitions and risk-appetite. Typically, this involves dedicating time to understanding the pros and cons of various investments, and a great way to get started is by simply looking at what options are available, as well as how these different opportunities compare.
On that note, here are just a few ways that investors can access the private market:
Publicly Traded ETFs
According to McKinsey's Annual Review of Private Markets, the private equity (PE) sector has outperformed the stock market for years, producing impressive net global returns exceeding 14%. And while direct access to PE firms is still beyond the reach of the average investor, shares in private companies can still be accessed through an exchange traded fund (ETF).
Private equity ETFs contain shares of private businesses, which can be traded readily on the public market. The multi-asset structure of ETFs offers optimal diversification, and because shares can be easily bought or sold on an exchange, they provide more liquidity than direct investments. Some popular private equity ETFs on the market today include Invesco Global (PSP) and ProShares (PEX).
Another way to access the private market is by contributing to an equity crowdfunding campaign. Equity crowdfunding sites strongly resemble traditional crowdfunding platforms such as GoFundMe, but instead of funding an individual or cause, investors are buying stakes in privately owned start-ups with the potential to grow significantly in value over time.
Importantly, no two equity crowdfunding platforms are alike, and many remain geared toward higher net worth individuals. However, this isn't always the case, and retail investors can get involved with a platform like AngelList for as little as $1000, or start even smaller by investing a modest $100 with Microventures.
Multi-Asset Class Funds
Finally, investors looking for diversification and access to the private market can consider investing in a multi-asset class fund. While multi-asset funds tend to have lengthier terms, and don't necessarily offer the same level of liquidity as an ETF, many investors prefer to take a hands-off approach, relying on the proven strategies of experienced professionals and management teams.
Yieldstreet's Prism Fund, for example, allows non-accredited investors to earn passive income by investing in everything from art to real estate and corporate finance, all with a single investment as low as $500. Moreover, beyond facilitating impressive returns, Yieldstreet's team provides retail investors with the knowledge and resources to learn how to invest like the top 1%.
Press Release Service by Newswire.com
Original Source: How to Access the Private Market