MIAMI, July 30,
2024 /PRNewswire/ -- Crystal Capital Partners, a
wealth-tech provider and leading turn-key alternative investment
platform for financial advisors, today announced the results of its
survey on private equity sub-strategies. The survey examined
factors driving allocations and demand for buyouts, growth
equity, secondaries, and venture capital. The results showed that
growth equity, where private equity managers provide capital to
established companies through minority stakes to help them finance
growth initiatives, is the most popular sub-strategy with financial
advisors.
The survey, completed by 45 prominent independent financial
advisors on Crystal's platform, revealed the following:
- Sub-strategy allocation trends:
- While most advisors noted that only a small percentage of
clients were allocated to private equity strategies, growth equity
is a standout. 23% of advisors said that more than 50% of their
clients were allocated to the strategy. Growth equity also has the
highest portion of current demand, with 38% of advisors noting that
their clients were very interested in it and 7% stating that
clients were extremely interested.
- By contrast, respondents were least interested in buyouts.
Most advisors (70%) said that less than 10% of their clients were
allocated to the strategy, and 38% of advisors said their clients
were not interested in it.
- Secondaries and venture capital produced mixed results. Only
10% of advisors have more than half of their clients allocated to
secondaries, and 7% have more than half allocated to venture
capital. Just over a fifth of advisors (21%) said their clients
were very interested in secondaries, while 16% said their clients
were very interested in venture capital.
- Sector demand: 83% of advisors stated that clients
were most interested in technology investments, followed by
healthcare (66%), energy (29%), financial services (15%), and
consumer goods (10%).
- Incentive for future allocations: Factors driving
demand are split. Reasons given were the potential for high
risk-adjusted returns (64%), diversification benefits (62%), the
longer-term investment horizon (48%), and access to innovative
companies (40%).
- Selection criteria: The most important criterion
for clients was the fund manager's track record (64%), followed by
the investment strategy and focus (56%), the reputation and
credibility of the fund/manager (49%), fees and expenses (42%), and
alignment of interests (e.g., co-investment by managers), which was
29%.
- Barriers: There is a clear education gap in
understanding the differences between private equity
sub-strategies. Over a quarter of advisors (27%) said their clients
do not understand the differences, while 42% stated that lack of
understanding or knowledge was a primary barrier to demand. Beyond
this, other barriers cited were illiquidity concerns (75%),
perceived higher risk (50%), and high investment minimums
(22%).
Steven Brod, Senior Partner,
Chief Executive Officer, and Chief Investment Officer of Crystal
Capital Partners, said: "There's increasing demand from financial
advisors for private markets. Private equity is traditionally
associated with buyout investing. So, it is interesting to note
that financial advisors are reporting that their clients prefer
growth equity strategies with their higher risk-return profile.
However, our survey also revealed that a large education gap exists
when understanding the different sub-strategies within the private
equity market. This underscores not only the importance of
providing advisors with educational materials they can use with
their clients but also the requirement for advisors to work with
trusted third parties who can help them source top funds and create
institutional-quality private equity portfolios that complement
clients' traditional assets."
The 2024 Private Equity Investment Outlook Survey was open from
May 28, 2024, to July 2, 2024.
About Crystal Capital Partners
Crystal Capital Partners is a turn-key alternative investment
platform that provides financial advisors with exposure to
third-party institutional private markets and hedge funds for their
QP clients' portfolios. Crystal's clients include independent
advisors, foundations, regional banks, IBDs, and
single/multi-family offices. The company's tenured experience in
the alternative investment industry, coupled with decades of
technology innovation, provides financial advisors with the
front/back-office infrastructure needed to source, build, manage,
and maintain bespoke alternative investment portfolios. Crystal is
a Registered Investment Advisor headquartered in Miami, Florida.
Important Disclosures
Media Contact
Helena Leslie
Peregrine Communications
helena.leslie@peregrinecommunications.com
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SOURCE Crystal Capital Partners