Are private markets right for you?

Are private markets right for you? Private market investments offer unique opportunities for investors seeking improved diversification and higher expected returns. And one of the primary attractions of private markets is the ability to access early-stage companies or niche industries that may not yet be available on the public market. That said, private market investments carry a different set of risks than traditional publicly traded securities like stocks and bonds, and are not always suitable for individual investors. Let's take a closer look at some of the key considerations for individuals who are evaluating investment in private markets. Also known as alternative investments, private market investments come in a variety of shapes and sizes with respect to risk, return potential, and structure. They are commonly assets which cannot be easily bought or sold. For those willing to give up some liquidity, this can lead to higher potential returns for investors willing to hold their positions for longer periods.

Private markets are also subject to less regulatory oversight and reporting requirements compared to public markets, where companies are mandated to disclose financial information regularly. From the perspective of individual investors, thorough due diligence is essential. Individuals must examine the investment's structure, fees, liquidity, tax implications, and the quality and track record of the manager of the vehicle. Given that private market investments are often complex exposures in newer structures, it is always advisable for individual investors to partner with financial professionals to determine whether alternative asset class exposures can meet their objectives in a way that aligns with their ability and willingness to take on risks.

When exploring private markets, individuals should seek out professionals with well-developed alternative investment product shelves and the operational expertise to effectively implement private market exposures.