For decades, assets like private equity were reserved for institutions and ultra-high-net-worth investors. Then, a new wave of companies began offering individual investors access to these opportunities, too.
Today, access is no longer hard to find. Private markets are available through wealth managers, brokerages, fintech platforms, and more.^1^ The new challenge for investors is determining which option is right for them.
There are three questions worth asking before committing your capital.
Who is behind the investments?
What is inside the investments?
What does it cost to invest?
Here's how we approach each of these areas at Crowd Street.
Who Is Behind the Investments?
Understanding where investment offerings come from and who reviews them is an important part of the decision-making process.
At Crowd Street, offerings come through distribution agreements with global asset managers. These firms have long track records managing capital for institutional investors, including pension funds, endowments, and foundations. A selection of their fund offerings is available on Crowd Street today.
In private markets, the difference in returns between top- and bottom-quartile managers can be significant, making manager selection an important consideration.^2^ Crowd Street seeks to work with established asset managers when selecting offerings for distribution.
What Is Inside the Investments?
Some private market investments are tied to a single opportunity, such as a multifamily real estate development in Charlotte or a loan to an infrastructure project in Texas. Others provide exposure across multiple companies and funds. Crowd Street’s current offerings take the latter approach.
What Does it Cost to Invest?
Fees can significantly impact returns, making them an important consideration for every investor. Investors can encounter multiple layers of expenses across managers, advisors, platforms, and other intermediaries.
Crowd Street is free to join and does not charge investors an ongoing fee to maintain an account. Investors pay a one-time sales load or brokerage commission on all net new dollars invested, which covers the distribution and placement of the offering. This is an upfront expense, not an ongoing or annual fee. Sales loads and commission rates are disclosed in the applicable offering documents.
Investors will also be subject to fees and expenses charged by the underlying fund manager including annual fund expenses. A portion of the annual fund expense is paid to Crowd Street as a distribution and shareholder servicing fee. Investors should carefully review the offering documents, including the fund's prospectus, for a complete description of all applicable fees and expenses.
Finding the Right Fit for Your Capital
Private markets have become far more accessible over the past decade. That's a positive development for investors, but it also means there are more choices to evaluate than ever before.
The right questions can help inform your evaluation. Before investing, it's worth understanding who manages the underlying assets, how performance and updates are communicated, and what you'll actually pay in fees.
At Crowd Street, we’ve made our answer clear.
Private market investments are generally illiquid, may involve extended lock-up periods, and carry the risk of loss, including total loss of invested capital. Investors should consider these risks carefully before investing.
Past performance is not indicative of future results, and there is no guarantee that any fund will achieve its investment objectives. Fund holdings are subject to change. Nothing in this article constitutes a recommendation to buy or sell any security or investment product. Investors should carefully review the applicable offering documents, including the fund's prospectus, for a complete description of investment terms, risks, fees, and expenses.
