In a climate of lower interest rates and elevated valuations, your clients need their investments to work harder. A standard equity and bond portfolio may not always deliver the growth and diversification they need.
Including alternative sources of return from private assets can potentially improve overall returns and increase portfolio diversification to better match your clients’ long-term goals.
The term private assets includes private equity, private debt, infrastructure and real estate. These asset classes may enable access to exposures or industries that can be difficult to access through traditional asset classes, but which may offer attractive income or capital growth characteristics. Each area has different drivers, so returns may not move in line with mainstream stock markets.
However they are not without challenges: there may be high minimum investment requirements, and they can be complex and illiquid. Investments may require significant due diligence and may not have the same transparency as publicly-traded assets. Investors usually receive a premium for taking on these risks, but need to manage them effectively in their portfolios.
We’ve been involved in the world of private assets for over 160 years.
We helped finance the improvement of Cuba’s rail network in 1853 and the construction of Japan’s first railway between Tokyo and Yokohama. We have a strong history in private equity and participated in the first round financing of both Facebook and Google. We have also invested in real estate since 1971 and now have a 25% stake in Neos, the largest specialist direct lending platform to small and medium sized businesses in Holland.
Our investment teams consist of experts with detailed, specialist knowledge of their specific area of the private assets landscape. They work to find opportunities, long-term trends and themes to complement equity and bond portfolios. We are big enough to have deep resources and skills, but small enough in these asset classes to be able to access opportunities that others may be less able to exploit.
We are one of a handful of companies with a truly diverse range of capabilities across private assets. Our range of options aims to provide higher returns, lower risk and to deliver diversification for your clients’ portfolios.
Past performance is not a guide to future performance and may not be repeated.
The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.
Alternatives can be more volatile than shares and bonds, and it may be harder to cash in the investment at short notice.
The views and opinions contained herein are those of the authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This webpage is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the webpage when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. All investments, domestic and foreign, involve risks including the risk of possible loss of principal. Investing in equities involves risk considerations, including market risk, prospects of stocks in the portfolio, changing interest rates, and real or perceived adverse competitive industry conditions. Investing in bonds may include interest rate, credit, inflation/deflation risk, mortgage and asset-backed securities, U.S. Government securities, and liquidity risks, to varying degrees. Investing overseas involves special risks including among others, risk related to political or economic instability, foreign currency (such as exchange, valuation, and fluctuation) risk, market entry or exit restrictions, illiquidity and taxation. These risks exist to a greater extent in emerging markets than in developed markets. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Private assets are intended only for qualified and/or sophisticated investors and carry special risk considerations, including illiquidity risk, wide differences in valuations, the use of leverage, and higher credit risk than traditional assets. Asset allocation and diversification cannot ensure a profit or protect against loss of principal. No investment strategy, capability or technique can guarantee it will achieve its stated objective. UK Investors: The data contained in this webpage has been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of fact and the data should be independently verified before further publication or use. The sectors shown are for illustrative purposes only and not to be considered a recommendation to buy or sell. Exchange rate changes may cause the value of any overseas investments to rise or fall. In North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc providing asset management products and services as a US SEC registered investment adviser and in the capacity of Portfolio Manager with the securities regulatory authorities in Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorized and regulated by the Financial Conduct Authority.