This article was written by expert contributor, Portfolio Manager Dania Zinurova from WAM Alternative Assets (ASX: WMA).
Introduction
Portfolio Manager Dania Zinurova delves into the fundamentals of alternative assets and the unique opportunities inherent in real estate, infrastructure, private equity, real assets and private debt.
Video: Private Equity
Dania explores the opportunities inherent in private equity, an asset class which gives investors access to entities that are not publicly listed or traded. Private equity strategies have a strong history of significantly improving the value of an investment, driven by factors such as the improvement of operational efficiencies in the underlying businesses, changes to the management teams, strategic planning, use of debt, incentives and an acute focus on improving operating margins.
There are a variety of unique strategies in private equity which can give investors exposure to income and capital growth, including:
- Buyouts: This involves investing in established businesses, usually relatively mature businesses requiring less intensive management. Typically, this means acquiring a majority stake in a business that faces succession planning challenges or is looking for expansion.
- Special situations: Mispricing opportunities can occur in a business when it faces a certain set of challenges, creating potential for future growth when the right management is in place.
- Venture capital and growth: This is a type of financing for start-up companies with substantial long-term growth potential. This strategy has the highest return potential, typically requiring intense management to mitigate higher risks of failure.
Underpinned by strategies such as these, private equity has grown in popularity due to its strong return and diversification potential through accessing themes often not available in other asset classes. In this latest video, we explain why we believe this momentum will continue.
Also in this series
- Real Estate
- Infrastructure
- Real Assets
- Private Debt
- Add if you would like more from the author, Dania Zinurova, check out her appearance on the Equity Mates Investing Podcast: Private equity, water rights and other alternative assets with Dania Zinurova
Investing in alternative assets has traditionally been limited to these institutional investors, as well as high net worth individuals, due to the large minimum ticket sizes required for a single investment (often $10 million). WAM Alternative Assets (ASX: WMA) however, seeks to democratise investing in alternative assets for retail investors through its listed investment company (LIC) structure, which provides investors with access to a diversified portfolio of alternative assets while also providing them liquidity and a steady stream of dividends.
Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only.