No. of Recommendations: 3
Private equity came up in the 'foreign exposure' thread on BRK
https://www.shrewdm.com/MB?pid=98894760Jim commented
The simplest explanation might have a lot of power: private equity. Better quality private firms get bought rather than going public, so the entrants to the public markets are worse on average. And the good public ones get bought, too, leaving the rump. This is compounded by the fact that the giants have eaten the lunch of a lot of firms. There used to be such a thing as a small profitable retailer.If true, then perhaps "if you can't beat them, join them"? I briefly looked into how to invest in private equity:
You can join directly if you are an "accredited investor". The bar for that actually isn't all that high (although specific firms may set the bar much higher). A number of members of this board might meet it. But the investments are complex and fees are high, so a lot of due diligence would be required, along with a firm grasp of one's personal risk profile.
perplexity.ai lists four or five ETFs that supposedly provide exposure to private equity, I won't list them here because their performance sucks.
BlackRock seems interesting (BLK). There's also Blackstone (BX) that does 'alt' stuff and private equity (to make things confusing. BLK does private equity and all sort of other things, and its performance doesn't suck (following includes dividends, data is from Yahoo which might be dodgy):
From 1999-10-04 SPY BLK
Annualized Return 0.0826000 0.2105000
maxDrawdown 0.5518946 0.6035948
From 2002-01-01 SPY BLK
Annualized Return 0.0954000 0.1764000
maxDrawdown 0.5518946 0.6035948
From 2010-01-01
SPY BLK
Annualized Return 0.1405000 0.1361000
maxDrawdown 0.3371727 0.4390169
From 2015-01-01
SPY BLK
Annualized Return 0.1339000 0.1440000
maxDrawdown 0.3371727 0.4390169
From 2020-01-01
SPY BLK
Annualized Return 0.1524000 0.1917000
maxDrawdown 0.3371727 0.4390169
But BLK is a very complicated company, see below, and I for one wouldn't know how to value it. BX also does private equity and its performance doesn't suck either. "Past performance is not ..."
From Yahoo's profile of Blackrock (BLK):
BlackRock, Inc. is a publicly owned investment manager. The firm primarily provides its services to institutional, intermediary, and individual investors including corporate, public, union, and industry pension plans, insurance companies, third-party mutual funds, endowments, public institutions, governments, foundations, charities, sovereign wealth funds, corporations, official institutions, and banks. It also provides global risk management and advisory services. The firm manages separate client-focused equity, fixed income, and balanced portfolios. It also launches and manages open-end and closed-end mutual funds, offshore funds, unit trusts, and alternative investment vehicles including structured funds. The firm launches equity, fixed income, balanced, and real estate mutual funds. It also launches equity, fixed income, balanced, currency, commodity, and multi-asset exchange traded funds. The firm also launches and manages hedge funds. It invests in the public equity, fixed income, real estate, currency, commodity, and alternative markets across the globe. The firm primarily invests in growth and value stocks of small-cap, mid-cap, SMID-cap, large-cap, and multi-cap companies. It also invests in dividend-paying equity securities. The firm invests in investment grade municipal securities, government securities including securities issued or guaranteed by a government or a government agency or instrumentality, corporate bonds, and asset-backed and mortgage-backed securities. It employs fundamental and quantitative analysis with a focus on bottom-up and top-down approach to make its investments. The firm employs liquidity, asset allocation, balanced, real estate, and alternative strategies to make its investments. In real estate sector, it seeks to invest in Poland and Germany. The firm benchmarks the performance of its portfolios against various S&P, Russell, Barclays, MSCI, Citigroup, and Merrill Lynch indices. BlackRock, Inc. was founded in 1988 and is based in New York City with additional offices in Boston, Massachusetts; London, United Kingdom; Gurgaon, India; Hong Kong; Greenwich, Connecticut; Princeton, New Jersey; Edinburgh, United Kingdom; Sydney, Australia; Taipei, Taiwan; Singapore; Sao Paulo, Brazil; Philadelphia, Pennsylvania; Washington, District of Columbia; Tor
