Michael Zeuner, Managing Partner at WE Family Offices, talked with Jason Zweig of the The Wall Street Journal to share his share his perspective on a personal question investors should ask before committing capital to alternative funds: Can I put this money aside for 10 years or more without impairing my daily financial life?
Between now and 2030, financial advisors are expected to move some $2 trillion of their clients’ money into alternative funds, according to Cerulli Associates. The article examines the questions investors should ask before committing capital to private equity, hedge funds, nontraded real estate, private credit and other alternative assets. These funds can carry high and complex fees, opaque marketing and disclosures, infrequent valuations and limited liquidity. Investors may need to hold their investments for years and generally can sell only limited amounts at predetermined times.
Zeuner’s advice to investors is to ask their advisors, based on everything they know about the client’s current and projected net assets and income, what specific factors make them think the client can set the money aside for 10 years or more without impairing their daily financial life. Investors should also ask what gives the advisor confidence they will not want or need to bail out, even at a significant discount.
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This article contains our current opinions and commentary that are subject to change without notice. Our commentary is distributed for informational and educational purposes only and does not consider the specific investment objective, financial situation, or needs of any recipient. The information contained herein does not constitute legal or tax advice to any person. Please consult with your tax advisor regarding any taxation implications of the information presented in this presentation.
