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Discussion Starter #1
After mulling the idea of starting this thread for awhile, I've come to the realisation that there is no perfect time to begin. When markets are near their highs people could say, “why should I consider moving out of the market when I'm making so much money?”. On the other hand, I'd hate to see anyone jumping out of the market now that it's 20% off the March high, to invest in something else.

Before I name any companies that I've invested with or am interested in, I'll start with some general thoughts on the topic for the benefit of those who are unfamiliar with these products. Anyone feel free to jump in with your ideas, thoughts, recommendations.

Why I like unlisted companies:
  • no thought of market timing – when the cash is available and won't be required in the foreseeable future, it's time to invest.
  • no way to track daily fluctuations of the value of the asset. Some types of investments offer opportunity for growth in addition to the regular dividends. Those companies may show updated unit values on monthly or quarterly statements.
  • no correlation to the stock market, especially in the case of income only investments. Stock market crashes 30%? no worries – the EFT's (electronic fund transfers) keep coming into your account.

Further notes:
  • minimum investment amounts typically start at $10k. With the inception of TFSA, minimum amounts were lowered to $5k to accommodate and entice those accounts
  • many private investments are RRSP eligible
  • in many cases you will need to be an “eligible investor” or “accredited investor”
  • some investments will have DSCs for 5 – 7 years, similar to mutual funds
Definitions:Disclosure: I don't receive compensation from any company or person that I may mention.
My only benefit will come from info and ideas which other forum members provide.

Previously approved by CMF: http://www.canadianmoneyforum.com/showpost.php?p=91992&postcount=1805
 

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Are you talking about private placements? Or managed portfolios like, CBRE's Realty Trust?

I wouldn't say there is no correlation with the stock market.. if global credit markets freeze up everyone is effected

For example, here's the Sharespost venture-backed index https://www.sharespost.com/pages/venture-backed-index showing down in August, up in October, down in November. Sound familiar? Sometimes lagged a bit. :p
 

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Discussion Starter #3
Invico Diversified Income Fund - Calgary, AB

6-minute video: overview of the Fund
http://www.invicocapital.com/investments/invico-diversified-income-fund/

Target yield is 8-10% p.a. with monthly distributions.
- see 'historical returns' table at bottom of above link.

Asset mix from March 31/17 report (not linked).


image hosting over 10mb

Overview of Invico DIF and offering from Wealthup

Disclosure: I own shares of Invico DIF. I'm not in a position to answer questions about the operations of the Fund. Contact the company or an investment advisor for information or advice. I'm only posting this for general info which may be of interest to a few people.

Most important: 5 things you need to know before investing in Alternative Strategies:
http://www.invicocapital.com/investments/alternative-investing/
 

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Invico Diversified Income Fund - Calgary, AB

6-minute video: overview of the Fund
http://www.invicocapital.com/investments/invico-diversified-income-fund/

Target yield is 8-10% p.a. with monthly distributions.
- see 'historical returns' table at bottom of above link.

Asset mix from March 31/17 report (not linked).


image hosting over 10mb

Overview of Invico DIF and offering from Wealthup

Disclosure: I own shares of Invico DIF. I'm not in a position to answer questions about the operations of the Fund. Contact the company or an investment advisor for information or advice. I'm only posting this for general info which may be of interest to a few people.

Most important: 5 things you need to know before investing in Alternative Strategies:
http://www.invicocapital.com/investments/alternative-investing/
What are the management fees? Are the monthly distributions classified as dividends or returns of capital?
 

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Why I dislike such offerings

Opaque
No external supervision of numbers
Illiquid
No disclosures of fees paid to acquire investors
 

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I don't like the sound of these either. The lack of transparency is most worrying, and there's no way to independently verify numbers such as performance. Their assets tend to be illiquid and pricing them is an art.

I also don't see the point of it. There are endless public and transparent investment vehicles available to every retail investor with a discount brokerage. There are endless possibilities just using standard mutual funds and ETFs.

My parents had invested in the Crocus Investment Fund which invested in private companies and venture capital. The fund collapsed and my parents lost a lot of money... all this while, their usual boring old index funds (and even generic big bank mutual funds) steadily went higher. There were a variety of management problems with Crocus, and they had illiquid assets.
 

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Can't say I'm a huge fan of these widely held private investment funds. The good (read high return) ones are only ever friends and family of the control person. If it was a great investment, chances are a bank would finance all they would ever need (subject to some exceptions). I've always found the widely held private entities, such as these, are illiquid, often have a high hurdle in marketing / investor referral costs and fees, and often nearly entirely illiquid. Maybe I'm jaded though.

Also not a fan of the original thesis on this: if not knowing the mark to market pricing, inability to market time, and low correlation are the benefits. Couldn't buying a low correlation security (correlation coefficients are available online) whenever you had ample cash regardless of looking at anything else, and not checking market price get all of the 'benefit' but with the added benefit of liquidity should the need arise?
 

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Some things to also consider...

1) you probably have to be a accredited investor to invest. Meaning you need to have substantial assets to lose.
2) they aren't very liquid. As they can only be sold to accredited investors, and there is no transparency, tracking or comparisons. The market for these products are small.
3) many of these types of investments are used by criminals for acts of fraud. Look at it from their point of view, investors with lots of money, no transparency, little oversight, and people more interested in paper returns than actual money. Not to mention anyone agreeing to these types of conditions isn't really a very smart investor.

Watch a few episodes of American greed and see if anything sounds familiar...
 

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For a safer and more transparent way to make these kinds of private investments, consider these holding companies. These are public companies and probably have superior controls, auditing, and visibility

ONEX - private equity holding company, 10 year return is 10.0% annual
BKR.B - directly owns many assets including some private equity, 10 year return is 11.3% annual in CAD

I own some of both.
 

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Also not a fan of the original thesis on this: if not knowing the mark to market pricing, inability to market time, and low correlation are the benefits.
That's a very interesting point. What's the main draw of these kinds of investments? Low correlation to stocks?

Traditional asset allocation solves that. Adding bonds to the portfolio smoothes out the volatility. Adding gold smoothes it out even further.
 
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