We have all witnessed bubbles pop in the financial markets over the years. With the rise of cryptocurrencies, investors are asking themselves if history will repeat itself. The historic volatility index (VIX) of Bitcoin has been high. This coupled with the lack of regulations can lead to major losses.
Conventional wisdom constantly pushes investors to balance and diversify during times like now. In this landscape of volatility and low interest rates that don’t even keep pace with inflation, staying the same course may not be the best option for you. Savvy investors and institutions are constantly hedging their portfolios against these downsides with a broad range of alternative investment opportunities like private placements.
Private placements are investments in private companies and funds such as real estate investment trust (REIT) or debt instruments such as the Family Business Fund (FBF). While the risk is there, the volatility of the market in this new economy is also there.
Private Stock Deals
Private placement class investments also include private stock issues or private offerings. While generally offered primarily to accredited investors and institutional investors, these investments are also offered to qualified high-net-worth individuals. They offer investors the opportunity to get in on the ground floor of an enterprise with the potential for phenomenal returns without pesky fees for purchasing them.
For companies like the Family Business Fund, private placements can also be a high-value strategy. They offer firms an infusion of capital that is quicker and much less expensive than public offerings, which are subject to costly public disclosure obligations and red tape.
Are Private Placements Right for You?
In 2018, the volume of private placement issues hit $49.17 billion, off 9.5% from 2012’s record levels (Bauguess, S.,etal., August 2018). Yet this was still the second-highest posting of private placement issuance volume in history. It goes to show that in the current market environment, private placements are attracting savvy, high-net-worth investors seeking diversification with a range of alternatives not correlated to the stock markets.
For help navigating these options or alternative funding opportunities, please contact the Family Business Fund and discover how to get started on the road to continued success.
