Investing in Private Equity
Hi everyone,
To give you some background, I recently inherited around $2.0 million from my passed grandfather. I am looking into investing this money, but am rather skeptical of the market at the moment, and bond yields are very low. Of course, I will still diversify some money into those two, but I would like to look elsewhere as well.
I would like to invest around $500,000 — $1,000,000 in private equity. I think a Fund of Funds is my best option due to the diversification they provide, in addition to me not being an accredited investor. That leads me to my next question, what is the accreditation requirement for investing in Fund of Funds? I am also open to investing in a a good PE firm that has diversified investments, but I have had little luck in finding any MM firms that take such small investment amounts.
**Main questions:**
What is the accreditation requirement for investing in FoF's? Does anyone know of any good Private Equity FoF's to invest in? What is their minimum amount? What are generally returns for PE FoF's? What are fee structures like?
Thanks a lot everyone. Any advice is appreciated!
Gosh, why not do something interesting? Go buy a company on all leverage knowing you have cash at home if things don't work out. Go buy a heliski operation. What's your day job? You've got the fckn golden ticket and you're trying to achieve a boring ass lp position? ugh
I don't get it either man. Kids that are rich and still go anywhere near IB are probably born on the lower end of their family's gene pool. It's a fucking structured ass world where the most mundane things are given a no for absolutely no personal reason at all. Go do something where the nos are just as momentous as the yes'. I don't even know if what I said makes sense... this is just how fucking confused I am atm.
If it were my money, I'd focus on RE. IMO you can get a decent range of levered and unleavened returns, clip a great current yield to maintain a comfortable lifestyle, while maintaining ownership of hard assets. I wouldn't waste my time with any sort of FoFs, it's a dying asset class. I also wouldn't waste my time trying to be a direct LP. With that little money, you're looking at small (risky) lower MM PE, not to mention your money is locked up for almost a decade and why would you want to be an LP when you can exert more control over your own investments without too much brain damage in RE. Note - I don't even work in RE so this isn't an endorsement, just what I would do.
The asset manager I work for has a pretty famous FoF business. It varies by Fund, but we have some that have mutual-class type shares with monthly liquidity (mainly invested in short-term funds) and then FoF's with 25% gates per quarter and 90 day notice, which essentially means around a year or so to get your money back. The smallest minimum investment in of our mutual-type fund types is $10,000 (it has a lot of capital in it), while we tailor bespoke options for clients willing to invest $20mm to $50mm minimum (also has to be an indication that the money will grow).
I haven't actually worked on our PE FoF(s); but I would recommend looking into a financial advisor that can hook you into HNW distribution platforms, which offer FoF type products and manager selection. Goldman Sachs' AIMS is a good example - it's an investment management division that evaluates other managers. JP Morgan likely has a similar alternative. You might have some difficulty because you are at the very bottom of HNW if at all; but an aggressive financial advisor might hook you up.
Also, FoF is a dying business. In a era of lowering fees, it's very hard to justify fees on top of fees. Keep that in mind as the underlying returns will have to be very strong.