24/10/2024
Should investing in quality private markets be restricted to only the wealthy?
A group of US lawmakers have proposed legislation that would allow any investor to buy private securities, provided they have passed an exam from the SEC or other regulator.
Today in the US, accredited investors need $1 million USD in net assets, excluding their primary residence, or at least $200,000 USD in yearly income.
In Australia it is net assets of $2.5m including the home, and $250,000 for each of the last 2 financial years.
Is your wealth a good measure of your investment sophistication?
Should individuals who do not meet this criteria, many of them younger, be denied from potentially lucrative investments in private equity funds?
“The most in-depth research continues to affirm that, by nearly any measure, private equity outperforms public market equivalents.” - McKinsey.
This issue is of particular note given that companies are staying private longer and debuting into public markets at higher valuation meaning the public does not have the ability to access much of the value creation.
What do you think?
