Thu, Jan 27, 2022
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Venture capital can be a diversifier, but many investors are still underweight

Wednesday, December 01, 2021

Bailey McCann, Opalesque New York: New research from Hardman & Co suggests that retail investors could benefit from adding venture capital to portfolios at a higher weighting than previously considered.

Venture capital is often included in an alternatives sleeve accounting for 5-20% of an investor portfolio. According to Hardman & Co, venture capital is distinct enough in its behavior as an investment and return profile that it should be considered its own asset class rather than being lumped in as part of a broader allocation to alternatives, which often includes hedge funds, real estate, private equity or private debt. An allocation to venture could also be made without the addition of any of these other asset classes.

The paper splits venture investing into two primary groups - seed stage investing and scale-up investing. Scale up investing includes most series rounds leading to either a pubic listing or sale to a non-venture buyer. Investors can expect the highest return from getting in at the seed stage, but also a higher risk of failure. Scale up companies have a lower risk of failure and a correspondingly lower rate of return on average.

The paper considers an allocation to venture capital from within a traditional 60/40 stocks and bonds portfolio. For those with a lower risk tolerance the paper considers an allocation of 5% to scale up venture and 2% to seed stage venture. Investors with the highest risk tolerance should cap their allocation to venture ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SPACs: Mobile commerce platform Rezolve to go public via $2bn SPAC deal, Malaysia's securities regulator cuts minimum fundraising for SPAC IPOs, raises price, Travel technology firm Mondee nears $1bn SPAC deal to go public, Italy's Zegna to start trading on NYSE from Dec. 20 after SPAC merger, New SPAC raises $230m to target real estate or mortgage fintech[more]

    Mobile commerce platform Rezolve to go public via $2bn SPAC deal From Reuters: Mobile commerce platform Rezolve said on Friday it will list in New York through a merger with a blank-check firm backed by billionaire Betsy Cohen, in a deal valuing the combined company at about $2 billion

  2. Tech: AI argues for and against itself in Oxford Union debate, 15% of Dutch pension funds fall victim to cyber crime, The fight to control the metaverse: Crypto die-hards prepare for battle with Facebook and Big Tech[more]

    AI argues for and against itself in Oxford Union debate From BBC: The Oxford Union has heard from many great debaters over the years, but this week added an artificial intelligence engine to its distinguished speakers. The AI argued that the only way to stop such tech becoming to

  3. PE/VC: SOKA-BAU to raise private markets allocation with first move in private debt, Biotech deals tumble to lowest in a decade over regulatory fears[more]

    SOKA-BAU to raise private markets allocation with first move in private debt From IPE: SOKA-BAU, the German umbrella organisation of the two pension funds for the employees in the construction industry ULAK and ZVK, is targeting an allocation to private markets of 15%, up from the curr

  4. New Launches: Goldman collects $5bn for Petershill IV, OSF Ventures launches third and largest venture capital fund, London growth investor Sprints Capital raises $602m for new technology fund, BlackRock launches two new active Climate Action funds, Edtech-focused Owl Ventures raises over $1bn across three funds[more]

    Goldman collects $5bn for Petershill IV From PE News: Goldman Sachs Asset Management has made a final close of its Petershill IV fund, the fourth vintage of its GP stakes growth-focused private equity funds. The firm said the fund had been oversubscribed with commitments mostly c

  5. PE/VC: A record year in private equity drives competition for lucrative industries, The power law - how venture capital ate the stock market, Europe's unicorn herd multiplies as VC investment more than doubled in 2021, Platform private equity deals could be 'fraught with risk'[more]

    A record year in private equity drives competition for lucrative industries From Institutional Investor: With more private equity capital available than ever before, valuations are high - and competition is even higher. According to PitchBook's 2021 annual PE breakdown report, which wa