NewVest fund lowers barrier to private equity investing
Private equity is a top-notch asset class that has outperformed other markets over the past decade. It has been a narrow club, though, with private equity funds often requiring minimum investments of up to $25 million.
Having democratized venture capital by putting it within reach of a much broader swath of investors, OurCrowd is now setting out to expand into private equity. It is offering investors an opportunity to participate in an Index PE fund managed by NewVest, which provides passive exposure to private markets in much the same way that ETFs and Index Funds provide passive exposure to public markets – but at a much lower investment threshold.
“Over the last few decades, I noticed with my partners two very fundamental big trends in the world of finance,” Edward Talmor-Gera, Founder and CEO of NewVest, told the OurCrowd Global Investor Summit in Jerusalem. “That is the growth and allocations to private equity, and in public markets, the shift towards the use of passive instruments. NewVest is bringing those two together.”
“Now we’re bringing that together – private equity and passive investing. For the first time it’s an opportunity to invest with potential for great returns with lower risk, lower volatility, lower cost and better alignment”
Over the past two decades, private equity has yielded returns as much as three times higher than public markets, he said. The combination of private equity with passive, index investing is an obvious marriage because of the outperformance, he added.
“In public markets, passive has already proven its value of outperformance with a lower cost and higher efficiency,” he said. “Now we’re bringing that together – private equity and passive investing. For the first time it’s an opportunity to invest with potential for great returns with lower risk, lower volatility, lower cost and better alignment.”
Research has shown that pooled returns across private market asset classes have historically performed well on both an absolute and relative basis as compared to both single-fund and fund-of-fund returns, according to Burgiss Private Equity Benchmarks.
NewVest’s Private Equity 50 Index Fund will allocate capital to the flagship funds of the most active PE investment firms, including TA Associates, Bain Capital, Insight, Clearlake, Blackstone, HIG, WCAS and The Carlyle Group. These funds are usually inaccessible to individual investors, who will be able to invest in the NewVest PE 50 at a minimum threshold of $100,000.
“Warren Buffett said a low-cost index fund is the most sensible equity investment for the majority of investors,” Talmor-Gera said. “Now OurCrowd, together with NewVest, has a better, easier way for all investors to allocate to private equity.”
The current period of market dislocation presents an “amazing” opportunity for investors, Tamor-Gera told correspondent Emma Walden of SuperReturn International 2022 in June.
“This is an amazing time to be investing in private markets,” he said. “Valuations have come down. There are going to be some great opportunities to buy at more reasonable prices.
“Historically in times where there have been dislocations in the market…private equity generated more of an alpha on a relative basis to the public markets.”
Learn more about OC 50 PE Index Fund Powered by NewVest
