“Alternatives are all the rage,” said Barron’s Magazine in the Up and Down Wall Street column on October 14th. It has also been “heard on Wall Street” that all the “Wall Street Elders are on board.” (1)
The herd (not the heard) is moving like sheep in the direction of alternative and hybrid investments such as infrastructure, clean energy, and private equity. Do you follow the herd, or do you forge your own path regarding this investment class?
Some “alts” just like tech companies will become unicorns, those startups with market values over a billion dollars, while some will suffer the fate of the dinosaurs. The giants on Wall Street are anxious to sell you both, especially if the fees are high enough. So an investor’s task is to separate the wheat from the chaff, decide which are Ford Mustangs and which are Ford Edsels, and aspire to separate the extraordinary from the ordinary. We at Baldwin can help.
As an example of what could be considered, you might now be invested in individual companies active either in construction of new infrastructure or funds that own established, publicly listed infrastructure, like airports or turnpikes. “Soon you will have access to private infrastructure funds which would be invested either through an equity offering or a debt placement, in projects across the US or around the world. Either a public or a private fund would generate both income and capital appreciation, as well as provide useful diversification as part of a fixed income and/or real assets allocation.”(2).
Another example is private equity, which is the ownership of shares not publicly traded nor listed on a stock exchange. Historically, investments in these have been limited to institutions like endowments or large companies like insurance companies and wealth funds. Today we have seen the advent of investment vehicles designed to provide individual investors with greater access to private equity. (3)
Currently, over 23 percent of institutional assets are invested in alternative assets, while only 5 percent of individual investors’ capital is invested in alternatives. So those Wall Street elders know there is a lot of room for this allocation to grow. Brookfield, a big player in the space, expects the personal investor allocation to grow by at least 12% per year going forward. (4) “Alts” have been mainstreamed.
Sources
1) Barrons, 10/14/24, Up & Down Wall Street, Andy Serwer https://www.barrons.com/topics/up-and-down-wall-street
2) I Capital WEB site https://icapital.com/
3) FSI Investments Education Stategies Private Equity https://fsinvestments.com/education
4) Barrons, 10/14/24, Up & Down Wall Street, Andy Serwer.
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Richard K. May, Managing Director (RKM), Business Development
Richard founded his financial advisory firm in 1980, which was one of the early fee-only advisors in the industry. He received his B.A. from Princeton University and his M.B.A. from the University of Michigan.
In 2007, Richard founded the West Chester LLC, a private equity company that promoted and funded business start-ups and public projects in the Borough of West Chester. In 2011, he co-founded the Uptown! Entertainment Alliance and the Uptown! Bravo Theatre, LLC. Together they purchased and rehabilitated the National Guard Armory, and then opened the Uptown! Knauer Performing Arts Center in 2016. Richard also serves on the board of Chester County OIC and is currently working on starting a live performance venue in Kennett Square, PA for 2025.