Maximize returns and minimize fees for qualified purchasers and family offices

Explore real-life examples and the impact of tokenization on this alternative investment strategy

Apr 10, 2023

Qualified purchasers and family offices face unique challenges when it comes to investing their wealth. They require investment options that provide high returns without the high fees typically associated with traditional investments. In recent years, alternative investments such as primary equity fund investing have gained popularity among these investors due to their potential for high returns and low fees. In this blog post, we will provide a detailed overview of the features and benefits of primary equity fund investing, tailored to the specific needs and pain points of qualified purchasers and family offices.

What is Primary Equity Fund Investing?

Primary equity fund investing is a type of alternative investment strategy that involves investing in privately held companies at the primary stage of their growth. These companies are often not yet ready to go public and may require additional funding to continue growing. Primary equity fund investing involves providing funding to these companies in exchange for an ownership stake.

Features and Benefits of Primary Equity Fund Investing for Qualified Purchasers and Family Offices

One of the main benefits of primary equity fund investing for qualified purchasers and family offices is the potential for higher returns. According to Hamilton Lane, a private equity investment firm, primary equity fund investing has historically returned an average multiple of invested capital (MOIC) of 2.8x. MOIC is a measure of investment performance that calculates the total amount returned to investors divided by the amount of capital invested. For example, if an investor invests $50,000 and receives $140,000 in return, the MOIC would be calculated as 2.8x.

Another feature of primary equity fund investing that may appeal to these investors is the ability to invest in private credit and private equity markets. Private credit refers to loans made to private companies or individuals, while private equity refers to ownership stakes in private companies. Both of these markets can provide higher returns than traditional public markets such as stocks and bonds, and they offer the potential for diversification in an investor's portfolio.

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