Fidelity Private Market Alternatives

[bs1234]

Just received email from Fidelity that I am now eligible to invest in their private market alternative products.   Shown below.   Anyone have experience with these.   Look on the more risky side but I  guess that is the point.

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Private equity

Seeks to provide enhanced long-term capital appreciation by investing in the equity of private, non-traded companies.

Private credit

Seeks to provide higher income and/or total returns by investing in privately negotiated loans, bonds, or other below-investment-grade debt instruments.

Real assets

Seek to provide attractive total returns, diversification, and income through exposure to physical assets, such as real estate and infrastructure.

[ptatohed]

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@bs1234 wrote:

Just received email from Fidelity that I am now eligible to invest in their private market alternative products.   Shown below.   Anyone have experience with these.   Look on the more risky side but I  guess that is the point.

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Private equity

Seeks to provide enhanced long-term capital appreciation by investing in the equity of private, non-traded companies.

Private credit

Seeks to provide higher income and/or total returns by investing in privately negotiated loans, bonds, or other below-investment-grade debt instruments.

Real assets

Seek to provide attractive total returns, diversification, and income through exposure to physical assets, such as real estate and infrastructure.

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Very interesting.  The first one reminds ma a lot of the Cambridge Endowment Model where you invest in companies before they hit the stock exchange.  There are ETFs that do this.  I've done pretty well with an ETF, ticker: ENDW (Cambria Endowment Style ETF).  

The second one reminds me a little of Peer to Peer Lending, like Prosper (and Lending Club, before they stopped).  I did ok with Prosper (and LC) but eventually turned off 'auto-invest' to let my 3 and 5 years notes run out, I think I literally have less than $20 in the last of my 5 year notes.  

The third one reminds me of Real estate investment trusts (REITs).  

But, very interesting.  What did you do to be eligible for their private market alternative products?  Anyway, let us know what you decide!

[AndySoCal]

I would be very wary of investing in private equity at the moment.

https://www.msn.com/en-us/money/general/private-credit-roundup-private-equity-catches-the-cold/ar-AA... 

The basic problem is amount of redemption requests

[CreditCuriosity]

To access private market alternative products at Fidelity, you generally must qualify as an accredited investor or qualified purchaser. This usually requires a minimum net worth of $5 million or an individual investment portfolio of at least $1 million.    Interesting.

[bs1234]

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@CreditCuriosity wrote:

To access private market alternative products at Fidelity, you generally must qualify as an accredited investor or qualified purchaser. This usually requires a minimum net worth of $5 million or an individual investment portfolio of at least $1 million.    Interesting.

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There were a bunch of confidentiality agreements which seem to include the exact criteria for qualifying, but being an accredited investor was one with slightly different conditions .   You could also have a minimum of $250M in some structure but pretty sure that I don't have that!  

[creditrizz]

 All riskier investments but can have much bigger payouts with better tax treatment than anything available on the exchanges.  Most of the private banks that require over $1m offer acess to some of these, like JP Morgan Private Client (not to be confused with chase private client which offers almost nothing).  

Private credit is all over the news lately because of defaults due to weak lending standards and fraud, but there's also alot of money to be made in it if lending standards are tight enough.  Private equity specifically can have some huge tax advantages

[bs1234]

Just to check the experience, I started a purchase (min $25K in some real estate fund).   They do a really good job of forcing you to read the risks and differences from non-private funds: in particular that your money may be unavailable for years (no guarantee of any redemption options being unavailable) and statements reminding you not to invest money in this fund that you might need at short notice   (and all this before any consideration of whether then investment will make money!).   Plus, if you are putting this in a taxable retirement fund, you must have RMD money elsewhere because again, you won't be able to pull money from here....

So, for now, I gave it a miss!

[iced]

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@creditrizz wrote:

 All riskier investments but can have much bigger payouts with better tax treatment than anything available on the exchanges.  Most of the private banks that require over $1m offer acess to some of these, like JP Morgan Private Client (not to be confused with chase private client which offers almost nothing).  

Private credit is all over the news lately because of defaults due to weak lending standards and fraud, but there's also alot of money to be made in it if lending standards are tight enough.  Private equity specifically can have some huge tax advantages

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My Fidelity advisor mentioned some internal program that reduces tax load by allowing me to still divest of some stock positions while delaying realizing cap gains is now available, but I've been busy so won't be discussing it with him until near the end of the month. Maybe its this program, though whatever this new available thing turns out to be has a minimum of $5 mil in investible assets as a requirement, so I don't know if it's this particular thing or another private program they have tucked away.

[bs1234]

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@iced wrote:

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@creditrizz wrote:

 All riskier investments but can have much bigger payouts with better tax treatment than anything available on the exchanges.  Most of the private banks that require over $1m offer acess to some of these, like JP Morgan Private Client (not to be confused with chase private client which offers almost nothing).  

Private credit is all over the news lately because of defaults due to weak lending standards and fraud, but there's also alot of money to be made in it if lending standards are tight enough.  Private equity specifically can have some huge tax advantages

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My Fidelity advisor mentioned some internal program that reduces tax load by allowing me to still divest of some stock positions while delaying realizing cap gains is now available, but I've been busy so won't be discussing it with him until near the end of the month. Maybe its this program, though whatever this new available thing turns out to be has a minimum of $5 mil in investible assets as a requirement, so I don't know if it's this particular thing or another private program they have tucked away.

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The program I was offered has the same $5M with Fidelity requirement to be "invited" but the individual offerings sometimes seem to have lower requirements ($1+M)

[iced]

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@bs1234 wrote:

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@iced wrote:

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@creditrizz wrote:

 All riskier investments but can have much bigger payouts with better tax treatment than anything available on the exchanges.  Most of the private banks that require over $1m offer acess to some of these, like JP Morgan Private Client (not to be confused with chase private client which offers almost nothing).  

Private credit is all over the news lately because of defaults due to weak lending standards and fraud, but there's also alot of money to be made in it if lending standards are tight enough.  Private equity specifically can have some huge tax advantages

---

My Fidelity advisor mentioned some internal program that reduces tax load by allowing me to still divest of some stock positions while delaying realizing cap gains is now available, but I've been busy so won't be discussing it with him until near the end of the month. Maybe its this program, though whatever this new available thing turns out to be has a minimum of $5 mil in investible assets as a requirement, so I don't know if it's this particular thing or another private program they have tucked away.

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The program I was offered has the same $5M with Fidelity requirement to be "invited" but the individual offerings sometimes seem to have lower requirements ($1+M)

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If it is, I'll likely be taking at least some part. My cap gains taxes have been brutal for several years now, and if this allows me to diversify without incurring cap gains taxes (as my advisor suggests it may) I'm very interested. Will let you know in July once I've gone through the discussion.