Secondary Funds: An Alternative Investment for Qualified Purchasers and Family Offices

Discover the benefits of secondary funds, a new and innovative way of investing in real world assets with potentially lower fees.

Jul 5, 2023

In recent years, alternative investments, also known as “alts”, have become increasingly popular among investors seeking higher returns and portfolio diversification. In fact, they’re expected to grow between 18-24% by 2025. As a qualified purchaser or family office, you are likely familiar with the benefits of alts, but may not be aware of secondary funds—a type of investment that leverages the power of tokenization to provide access to private equity and private credit investments, while potentially minimizing fees. In this post, we will explore the features and benefits of secondary funds and how they can help you achieve your investment goals. Investment risks do apply.

What are secondary funds?

Secondary funds are investment vehicles that allow investors to access real world assets, such as private equity and private credit, through tokenization. Tokenization is a process that converts assets into digital tokens, which can be easily traded on blockchain-based platforms. This provides investors with the opportunity to make smaller investments, with the potential for greater liquidity, while still benefiting from the potential returns of private investments.

Benefits of secondary funds:

Diversification: Secondary funds offer access to a range of alternative investments, which can help you diversify your portfolio and potentially reduce overall risk.
Lower Fees: By using tokenization, secondary funds can significantly reduce the fees associated with traditional private equity and credit investments.
Potential Liquidity: Unlike traditional private investments, secondary funds provide investors with the potential for liquidity and flexibility, enabling them to buy and sell tokens more easily.
Experienced Management: Secondary funds are managed by experienced teams, such as Hamilton Lane, which has over 22 years of experience, $14 billion in assets under management, and has completed over 310 transactions. Hamilton Lane has a team of 35 members with over 26 years of experience.

Real-World Impact:

To illustrate the potential impact of secondary funds, consider the potential case of a family office that invests in a secondary fund managed by Hamilton Lane. By investing in a diversified portfolio of private equity and credit investments through tokenization, the family office can potentially generate higher returns than traditional investments, while also potentially reducing fees and overall portfolio risk. This may help the family office achieve its long-term investment goals, such as funding education for future generations or supporting charitable causes. Note that investment goals may vary, and this information is provided for illustrative purposes only and should not be construed as a recommendation to purchase securities or indicative of future results.

Unlock Secondary Fund Potential:

If you are interested in exploring secondary funds, we encourage you to consider investing through a platform like securitize.io, which offers a range of investment opportunities in tokenized private assets. Keep in mind that past performance is no guarantee of future performance, and you should carefully consider your investment goals and risk tolerance before investing.

Secondary funds offer an innovative way for qualified purchasers and family offices to invest in private equity and credit investments, while potentially minimizing fees and risks. With experienced management teams like Hamilton Lane and the power of tokenization, secondary funds provide investors with access to a range of real world assets that can help achieve their long-term investment goals.

Securities are offered through Securitize Markets, LLC, (“Securitize Markets”) a registered broker-dealer and member FINRA/SPIC. Private market investments can be speculative or considered risky, including the potential loss of your investment, and may not be appropriate for every investor.

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