Starting at a PE fund soon, and wondering if I should even bother keeping my personal investment accounts updated anymore. Do most PE firms explicitly prohibit personal trading, or require you to disclose trades? If so, what do PE professionals tend to do - use Wealthfront/Mint or something?
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MF / UMM - Almost always no. It's a similar policy to most banks in that you can own ETFs (possibly excluding those directly tied to your industry coverage) but blanket ban on trading single names LMM - Usually yes, but subject to some kind of monitoring. I'd imagine there's a restricted list or something but probably no pre-clearing
Most PE people I know are pretty heavy tilted toward holding cash. Pre-MBA you're saving for business school while post-MBA a big chunk of your net worth is tied up in GP commit / co-invest. To the extent that people are exposed to markets as well, it's usually through something like betterment/wealthfront, a traditional wealth manager, or a random assortment of ETFs.
Who told you this re: MFs? Certainly not true - you need to pre-clear with compliance, but it’s actually quite relaxed. I can speak for 2 firms which maintain a list of restricted names, but besides those you are usually free to trade.
I definitely know of a few MFs and UMM firms that ban all trading of individual stocks. This may be the exception rather than the norm but it certainly exists.
At a LMM currently.
We can have our own portfolio with individual stocks, but we do have a restricted list (a couple micro caps that I would never buy anyways). We have to submit our holdings and transactions quarterly to compliance (we use an outside service for this). I have never had a problem with any of my trades/holdings since I've been here.
Agree with D3soccerguy — this is common practice in the LMM. I believe that it is tied to the fact that the fund is a Registered Investment Advisor and therefore all of the employees need to report any securities purchased / sold each quarter as well as certify that they aren’t breaking the law. It is an annoying compliance hurdle but not really that cumbersome if you aren’t actively trading.
What is LMM in your context? $1BN? $500M?
Ask for the firm's Personal Investment policy and make your decision based on that.
I can trade but we have a restricted list and my statements are sent to the firm.
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