The Significance And Opportunity of The Alternate Investment Options for New Age-investors

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The decision to invest in Private Equity funds entails indirectly financing the launch, growth, divestment, transmission, or recovery of non-listed companies. You agree to stay invested for at least ten years. Apart from direct investments in non-listed companies, you delegate value creation to the Private Equity fund.

Private equity is a critical economic development driver. It promotes corporate growth, job creation, and the development of new generations of business leaders.

Why should one invest in the private equity market?

There are two major reasons to invest capital in this investing category. These are

  • Low correlation to other asset classes: As per performance, private equity funds are less volatile than listed markets.
  • Diversification: Interested investors can diversify away from more traditional asset classes.

Portfolio company definition:

Portfolio companies are the ultimate beneficiaries of any private equity investment. Few private equity firms dedicate significant time to identifying companies with high growth potential through rigorous due diligence processes.

Direct investments include:

Direct or co-investments with no middleman are investments made directly into private companies. In this case, it is essential to have a thorough understanding of the industry in which the company you are investing in. It allows the investor to be directly involved in a company’s growth story and realise returns on exit.

Who can benefit from private markets?

Long-term investment horizons and illiquidity risk – Private equity investments are long-term and should be considered to have a 6-10 year investment horizon.

  • Be aware of the J-curve effect, which refers to the cash flows generated by typical private equity investment. Investments are typically made in years 1-6, with realisations occurring in years 3-10. As the general partners require capital to make investments, capital is “called” by investors. When portfolio companies exit or are recapitalised, the investor will receive payouts known as distributions. Making several private equity investments can help mitigate the “J Curve” effect.
  • Private equity may appear to be a complex asset class to inexperienced and non-professional investors and fund managers. It necessitates a well-thought-out and well-diversified allocation and investing throughout the cycle.
  • Those investors are disciplined and have a sufficient risk appetite, this type of investing suits them well.

Investing in global funds:

We live in an era when geographical boundaries are meaningless. We use global products, you go on foreign vacations, and you do many of the things that Indians do. It is now feasible to interact with people worldwide and use products and services manufactured in other countries. Hence, it is now possible for someone enthusiast to invest in international stocks and equities.

Perhaps you are unsure how to incorporate an international flavour into your portfolio, or you are concerned about the safety of such investments. You can now put money in international funds. Let’s look at how Indian Asset Management Companies (AMCs) operate.

  • Able to invest in an international fund is the same as investing in a domestic fund or equity scheme. You invest money in rupees and receive units of the fund in return.
  • Enthusiastic investors can purchase units in an international fund through an Asset Management Company (AMC), distributor, or aggregator system.
  • Investors can redeem their investments in open-ended international funds at any time.
  • Professional fund managers who invest following the scheme mandate take the necessary risk mitigation measures.
  • The fund manager takes money from investors and invests it in stocks of companies listed on global stock exchanges. The fund manager may also invest in foreign funds, which varies based on the scheme mandate.
  • In this way, international funds enable investors to benefit from global investment opportunities without incurring the additional risk of selecting companies in countries and markets with which they may be unfamiliar. There are multiple other advantages to investing in international investment options.
  • It is observed that in recent days, investing in international funds are increased. Some financial experts estimate that in the coming years, a big chunk of the investment amount would contribute to these alternative options. These are gradually coming into the trend. These alternatives promise a high return in the long term. But it would be possible if the fund allocation is managed properly.

In this scenario, if anyone has an interest in the above-mentioned investing option, he/she might seek professional advice from AIF & PMS Experts India Pvt. Ltd.

About AIF & PMS Experts India:

We have built this dream of taking our “L-E-A-P” of Wealth with over two decades of collective PMS management professional experience. AIF & PMS Experts India is a multi-asset Alternative Investments oriented company. Our essential financial services include Portfolio Management Services, Public Equity (listed and unlisted), Venture Capital, Private Debt Structure Products, and Real Estate Alternative Investments.

If you wish to invest in AIF and PMS, you can surely consult with AIF & PMS Experts. We assist investors in monitoring quality and segmenting processes. Please mail us at [email protected] or contact us at 8368586435. People would like to visit our page

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