Whats wrong with 7% growth and 1-3% yield?I have seen a couple of threads on private markets but they have focused on different things.
My brother has an AUM financial advisor. That is not going to change, I have already made the case that he doesn't need to give these guys 1%+ of his money. He likes having them, it's fine, I don't need counsel on that.
They are pressing him to put 25% of his assets into private markets - half into private credit via Monroe Capital funds, and half in private equity via Blue Owl Capital. These are legitimate, large-scale funds, and through the financial advisors' firm, he can access these (the minimum buy-in is 100k for each, I believe, when done through the financial advisor).
The funds are not fly-by-night, the liquidity is limited but not terrible (e.g. one year hard lock, then can access quarterly). The advisors are using the pitch that a large portion of companies are staying private now, etc etc. And they are saying this is good diversification since they are not lock-step correlated with the S&P 500.
I am still skeptical. I don't think these companies are going to teeter on the brink of collapse or anything, and I don't think it's likely that you will just lose all your money (like you might if you were doing a private equity investment in one company instead of via a fund that invests in many companies). But I am skeptical that the lack of regulation will work out in the long run. It's just not as transparent a marketplace as the public markets, it feels too risky for 25% of your money.
Am I right to be skeptical? I guess it smells a little too close to the financial instruments of the great financial crisis - repackaged loans of uncertain origins? Would you advise someone to stay away from these markets, even via large-scale reputable funds?
Statistics: Posted by Dpmbball — Fri Jun 07, 2024 12:25 am