Private equity for the people. Because there isn’t enough high risk investing options for the average investor, Wealthsimple this week partnered with LGT Capital Partners to offer retail investors the opportunity to invest in private equity deals.
The platform announced the new offering, Wealthsimple Private Equity, on Wednesday, while stating that private equity provided average returns of 10.5% from 2001 to 2023, versus the market average of 5.7%, which was then followed up with the statement that “given the current economic conditions,” they expected PE to outperform the stock markets by 3%, net of fees.
The new fund meanwhile is calling for annualized long-term return targets, which is said to be a span of 10+ years, of 12% to 14%.
While addressing risk as a major part of private equity, including factors such as lack of liquidity, Wealthsimple claims that its partnering with LGT, which is the Liechtenstein royal family’s wealth management group, will reduce those risks. LGT will also be a co-investor in the deals that are offered to Wealthsimple, and is said to use less leverage than the “industry average.”
The private equity unit meanwhile is said to only invest in the secondary market at a discount, or at market prices for new direct investments, which is said to avoid debt financed at low interest rates.
And while the company says the offering is aimed at bringing private equity deals to a new class of investors, the criteria to be able to make such investments is a minimum account balance of $100,000 in deposits, and a long investing time horizon.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.