Coyne talked about how the changing nature of deal structures has made private equity more accessible to individuals, and this trend toward greater accessibility has been bolstered by the roll out of investment platforms that are available to advisors.
“We’re using technology to go direct to managers to get an institutional price for private equity deals for the retail investor,” said Finn from Artivest. “We have a digital platform to make those transactions, which is an alternative to a feeder fund.
“Diversification in private equity is hard to get in terms of geography and general partners,” he continued. “But registered funds provide good diversification in a private equity vehicle.”
Allocation
Veronis noted that based on customer activity on iCapital’s platform, he’s seeing between 6% and 15% allocations to private equity within investor portfolios.
“It depends on various factors, such as the client’s age,” he said. “If your client is 70 years old, unless you’re doing it for estate planning don’t put that money into private equity because it’s 10-year lockup. But if you have the right risk appetite and want to increase your returns, probably the right amount is between 8% and 12%, and that applies to both private equity and private credit.”
“With [the private credit] space you want to be thinking senior-secured debt, largely 70% first lien,” Veronis said. “But having the proper allocation across private equity, private credit and perhaps private real estate makes a lot sense in today’s marketplace, but a lot of that depends on the individual client.”
The private capital markets can be a profitable place to play. But as Coyne stressed as this panel discussion came to a close, advisors who are considering putting client money into this sphere need to gauge their clients in one important area. “Do they have the temperament to understand illiquidity?” he asked.