Author: Danny Popescu | March 29, 2021
Given hot stock markets globally, I geeked out a bit this morning and did some research. According to the Wilshire 5000 index, at the last count, there were only 3530 publicly traded companies/businesses in the US. Meanwhile, according to SBA statistics, there are over 30 million public businesses in the US. Statista says 55% of adult Americans invested in the US stock markets last year, a figure that has remained steady over the last decade. US census reports show that the adult population in the US is roughly 209 million meaning that there are approximately 115 million Americans who invest in US markets.
Of course, given that the US economy is the largest in the world, investors worldwide also invest in American public markets, but my eyes went blurry and I figured you’d get the point. So potentially hundreds of millions of people are competing, aka driving up prices, for the same 3500 stocks when 30 million private businesses exist in the US. As such, is it a surprise that pensions, endowments, charities, and the ultra-high net worth have huge allocations to private businesses?
The same goes for fixed income/debt/credit, whatever you want to call it. Just as you can loan money publicly by buying bonds, you can also loan money privately but without the volatility experienced in public markets given public equity and debt can be traded in milliseconds.
If you’re still an investor who’s only investing in a crowded space, you might want to think again. In Canada, allocations to private securities by retail investors in barely measurable. Advisors at Harbourfront all escaped mainstream investment dealers given the lack of access to ‘retail friendly’, private securities. Given Harbourfront has an exclusive on three large private securities pools, today, roughly 30% of Harbourfront’s assets under administration are allocated to private securities, a figure which continues to grow. In regularly speaking with advisors at the bank-owned dealers and other conglomerates, in almost every case their allocations to private securities are………… wait for it……….. zero.
“I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of Harbourfront Wealth Management. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by Harbourfront Wealth Management Inc.”
Disclaimer – This information transmitted is intended to provide general guidance on matters of interest for the personal use of the reader who accepts full responsibility for its use and is not to be considered a definitive analysis of the law and factual situation of any particular individual or entity. As such, it should not be used as a substitute for consultation with a professional accounting, tax, legal or other professional advisor. Laws and regulations are continually changing, and their application and impact can vary widely based on the specific facts involved and will vary based on the particular situation of an individual or entity. Prior to making any decision or taking any action, you should consult with a professional advisor. The information is provided with the understanding that Harbourfront Wealth Management is not herein engaged in rendering legal, accounting, tax or other professional advice. While we have made every attempt to ensure the information contained in this document is reliable, Harbourfront Wealth Management is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or as to the outcome to be obtained from the use of this information, and is without warranty of any kind, express or implied. The opinions expressed herein do not necessarily reflect those of Harbourfront Wealth Management Inc. The particulars contained herein were obtained from sources we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are not to be construed as a solicitation or offer to buy or sell any securities mentioned herein. Harbourfront or any of its connected or related parties may act as financial advisor or fiscal agent for certain companies mentioned herein and may receive remuneration for its services. The comments and information pertaining to any investment products (The Portfolios) sponsored by Willoughby Asset Management are not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of units of The Portfolios is made pursuant to the Offering Memorandum or Simplified Prospectus and only to investors in Canadian jurisdictions. Important information about The Portfolios is contained in the Offering Memorandum or Simplified Prospectus available through Willoughby Asset Management. Commissions, trailing commissions, management fees, performance fees, and expenses all may be associated with investments in The Portfolios. Investments in The Portfolios are not guaranteed, their values change frequently, and past performance may not be repeated. Historical annual compounded total returns including changes in unit value and reinvestment of all distributions do not take into account sales, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Unit values and investment returns will fluctuate and there is no assurance that The Portfolios can maintain a specific net asset value. Harbourfront Wealth Management Inc. (“Harbourfront”) has relationships with related and /or connected issuers, which may include the securities or funds discussed in this commentary and are disclosed in our Statement of Policies Regarding Related and Connected Issuers. This policy is included in your new client package, on our website, or can be obtained from your investment advisor.
Click below to return to the Newswire portal.