What are alternative or private market investments?
Alternative investment is an investment in asset classes other than public stocks, bonds, and cash. Private market investment is one of the most common types of alternatives.
Why private market?
Private market solutions are gaining traction amongst investors in recent years as they can be powerful tools in helping investors achieve growth, reduce volatility, and provide portfolio diversification.
It encompasses a wide range of assets and strategies including infrastructure, real estate and private equity, pre-IPO.
Private market investment is traditionally accessible only to big-ticket institutional investors due to extremely high ticket size. Platforms like Altive breaks the hurdle to US$10,000.
Traditional V.S. Alternative
Asset Classes
Liquidity
Correlation
Volatility and Return
Traditional Investment
Equities, bonds & cash in public market
High liquidity profile
High correlation to markets
Higher volatility
Alternative Investment
Private equity, private credit, private REITS and others
Liquidity depends on product asset classes
Low correlation to markets
Lower volatility with higher potential returns
Traditional Investment
Alternative Investment
Asset Classes
Equities, bonds & cash in public market
Private equity, private credit, private REITS and others
Liquidity
High liquidity profile
Liquidity depends on product asset classes
Correlation
High correlation to markets
Low correlation to markets
Volatility and Return
Higher volatility
Lower volatility with higher potential returns
Enormous size of the private market previously ignored by retail investors
Private equity net asset value growth outpaced total market cap of listed companies by more than 8 times since 2000. By diversifying into the private market, investors can access one of the fastest-growing asset classes.
*Source: Based on World Bank and Preqin data, as cited in McKinsey & Company’s “Global Private Markets Review 2020.”
Returns captured during pre-IPO far outweighed post-IPO
An example of private market investment offered by Altive is late-stage pre-IPO investment. The graph indicated that more value was captured before a company went IPO*.
*Source: Crunchbase as of Oct 2021
Learn more about the common types of Private Market Products
Pre-IPO Placements
Private sale of large blocks of shares before a stock is publicly listed.
Private Equity
Directly invest in companies. Alternative form of private financing.
Private Credit
Debts held by or extended to private companies.
Private REITS
Physical assets such as real estate, energy, and infrastructure.
Hedge Fund
Managed Alternative Investments that employ non-traditional strategies.