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Alternative Investments

Qualified Opportunity Zone Funds

By Alternative Investments


What if you could do well by doing good—using your wealth to help revitalize economically distressed communities and enjoying some impressive tax breaks for your efforts? That’s exactly what you may be able to accomplish through a new type of investment called Qualified Opportunity Funds.

In this month’s Flash Report, Qualified Opportunity Funds: The Latest Way to Do Well by Doing Good, you’ll learn all about how Qualified Opportunity Funds work along with their many benefits. Armed with that information, you can start to determine if these funds make sense for you and your goals—and, if so, how to take the next steps.
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EWM in the News: Real Assets Adviser Features EWM’s CIO Prateek Mehrotra in Comprehensive Perspective on the Endowment Model

By Alternative Investments, Endowment Index™

Prateek Mehrotra, MBA, CFA®, CAIA®, Chief Investment Officer of EWM is quoted extensively in this month’s Real Assets Adviser magazine.  In an article titled Endowment Model Takes Its Lumps: It has been a rough year or two, but proponents remind detractors that the model is built for long-term investment strategies, author Steve Bergsman collects viewpoints from several industry professionals analyzing the broad asset allocation of the endowment model and how the various underlying asset classes have contributed or detracted from performance in both recent years and over the long term.  Click on the link to read the entire article.

Press Release: New Fund Targets Large, Late-Stage Venture-Backed “Unicorns”

By Alternative Investments, Unicorn Technology

APPLETON, Wisc., Oct. 18, 2017 /PRNewswire/ — Endowment Wealth Management, Inc. has announced the launch of its EWM Unicorn Technology Fund. The private fund is seeking to raise up to $25 million to capitalize on what its management team sees as opportunities in the secondary market for private, late-stage venture capital technology companies. Such firms are often referred to as unicorns due to their rarity and size. The Fund manager will seek to build a diversified portfolio of companies that it believes may experience a liquidity event in the next 2-4 years. The Unicorn Technology Fund is currently fully invested across six such companies and the manager intends to add additional investments as the Fund grows.  Read entire release.

EWM E Logo 50x50_opt

U.S. Private Equity Breakdown-2Q-2017

By Alternative Investments

In the 2Q US PE Breakdown report by Pitchbook & Merrill, it examines each phase of the industry’s cycle and investigates the factors most relevant to investors.

Key takeaways in the report:

  • PE fundraising through June 2017 has mirrored that of the 2007 boom. Capital commitments are on pace to surpass $220 billion.
  • After clocking in at 10.7x in 2016, US M&A EBITDA multiples have regressed slightly in the first half of the year, to 10.5x. Meanwhile, the median debt percentage has increased to 56.3% as high-yield bond spreads reached a three-year low.
  • Deal flow held steady in 2Q 2017, though it is still slightly below last year’s pace. Across the US, 886 deals were completed, totaling $153.6 billion in value.
  • PE exits continued their slowdown with $102.3 billion in exit value over 474 deals. The industry’s selling rate appears to be entering a new normal following the sale of excess company inventory from the last recession.

Download the full report here: PitchBook_2Q_2017_US_PE_Breakdown

Internet Trends Report 2017

By Alternative Investments, Venture Capital

Here’s a first look at the most highly anticipated slide deck in Silicon Valley. This year’s report includes 355 slides and tons of information, including a new section on healthcare that Meeker didn’t present live.

Here are some takeaways:

  • Global smartphone growth is slowing: Smartphone shipments grew 3 percent year over year last year, versus 10 percent the year before. This is in addition to continued slowing internet growth, which Meeker discussed last year.
  • Voice is beginning to replace typing in online queries. Twenty percent of mobile queries were made via voice in 2016, while accuracy is now about 95 percent.
  • In 10 years, Netflix went from 0 to more than 30 percent of home entertainment revenue in the U.S. This is happening while TV viewership continues to decline.
  • Entrepreneurs are often fans of gaming, Meeker said, quoting Elon Musk, Reid Hoffman and Mark Zuckerberg. Global interactive gaming is becoming mainstream, with 2.6 billion gamers in 2017 versus 100 million in 1995. Global gaming revenue is estimated to be around $100 billion in 2016, and China is now the top market for interactive gaming.
  • China remains a fascinating market, with huge growth in mobile services and payments and services like on-demand bike sharing.
  • While internet growth is slowing globally, that’s not the case in India, the fastest growing large economy. The number of internet users in India grew more than 28 percent in 2016. That’s only 27 percent online penetration, which means there’s lots of room for internet usership to grow. Mobile internet usage is growing as the cost of bandwidth declines.
  • In the U.S. in 2016, 60 percent of the most highly valued tech companies were founded by first- or second-generation Americans and are responsible for 1.5 million employees. Those companies include tech titans Apple, Alphabet, Amazon and Facebook.
  • Healthcare: Wearables are gaining adoption with about 25 percent of Americans owning one, up 12 percent from 2016. Leading tech brands are well-positioned in the digital health market, with 60 percent of consumers willing to share their health data with the likes of Google in 2016.

Download the Internet Trends Report here: Internet+Trends+2017+Report

Source: KPCB, Recode

2016 Private Equity By The Numbers

By Alternative Investments


This morning PitchBook released its report on 2016 private equity activity. It’s not great. Deal volume is down. Deal multiples are up. Equity contributions are up. Exit values are down. Fundraising is down. PitchBook calls this a “return to normalcy” from the record-breaking highs of 2014 and the “turning point” of 2015. The breakdown:
• Deals: Private equity firms invested $649 billion into 3,538 deals last year. That’s down 12% by value and 14% by volume from the year prior.
• Multiples: Median enterprise value hit 10.9x EBITDA for M&A transactions last year, up from 10x in 2015 and 8x in 2010. Why? Too few feasible investment opportunities, PitchBook posits.
• Debt-to-equity: The median debt percentage for private equity and M&A deals fell to 50.5% of the enterprise value, compared to 56.8% in 2015. Buyout shops are having to contribute more equity to deals.
• Exits: Buyout firms pulled $316 billion on 1,097 exits in 2016. That’s down 22% by value and 18% by volume from 2015.
• Fundraising: 11% fewer private equity funds raised money last year than the year prior, and commitments were down 12%.

Source: Pitchbook

EWM CIO discusses the Endowment Model of Investing in Podcast with Institutional Real Estate Inc.

By Alternative Investments, Endowment Index™

Prateek Mehrotra, CIO of Endowment Wealth Management®, was interviewed this week by Institutional Real Estate Inc.  In the discussion, Prateek talks about the history of the Endowment Model and how the Endowment Index® was constructed.  Listen to the podcast.

The podcast is for information purposes only and should not be considered personalized investment advice. Investments involve risk of loss and may fluctuate in value.  You should carefully consider all risks and costs prior to making any investment.  You cannot invest directly in an index. Indexes do not have fees.

$65 billion dry powder for secondary private equity

By Alternative Investments

There’s $65 billion in ‘dry powder.’

The secondary market for private equity is at record levels, and only getting bigger.

That’s the big takeaway of a survey of more than 70 professionals who are in the business of buying and selling stakes in existing private equity funds conducted by the private capital advisory group of Evercore Partners. From the results:

Mountain climbing: The level of dry powder (i.e., committed capital) for secondary buyers is at a record high of $65 billion, which is up from an already-sizable $56 billion in June 2015. Another $40 billion of secondary fundraising is targeted for 2016. Of the current amount, more than 80% is controlled by the top 20 buyers.

Where in the world? North America remains the most attractive region, followed by Europe and Asia.

Deal types: 39% of respondents said they would focus primarily on LP interests, 17% of directs/GP liquidity opportunities and the remaining 44% expressed no preference. In 2014, around 71% of volume was for buyout-related assets, followed by real estate (14%) and venture capital (6%).

Indebted: In 2015, leverage became more important. A quarter of deal volume was leveraged at the SPV level (compared to 17% in 2014), while LTV levels hit 40% (vs. 30%).

Crystal ball: The majority of respondents expect between $35-$40 billion in secondary volume this year, with around half saying that macro developments will be the driving factor (which is apparently separate from “public market performance”—which was the driving factor for 15% of respondents).

(Source: Fortune)

Size of Global Real Estate

By Alternative Investments

The total value of all developed real estate on the globe reached US$217 trillion in 2015, according to calculations by international real estate adviser, Savills. The analysis, published today for the first time, measures the entire developed property universe including commercial and residential property as well as forestry and agricultural land.

The value of global property in 2015 amounted to 2.7 times the world’s GDP, making up roughly 60% of mainstream global assets and representing an important store of national, corporate and individual wealth. Residential property accounted for 75% of the total value of global property.

Overall, the biggest and most important component of global real estate value is the homes that people live in, totalling US$162 trillion. The sector has the largest spread of ownership with approximately 2.5 billion households and is most closely tied with the fortunes of ordinary people. Residential real estate value is broadly distributed in line with the size of affluent populations: China accounts for nearly a quarter of the total value, containing nearly a fifth of the world’s population. Yet the weight of value lies with the West, over a fifth (21%) of the world’s total residential asset value is in North America despite the fact that only 5 per cent of the population lives there.

The trend for western nations to dominate real estate is most pronounced in commercial markets, where nearly half of the total asset value resides in North America. Europe makes up over a quarter while Asia and Australasia contain 22 per cent, leaving just 5 per cent for South America, the Middle East and Africa.

Not included in the global calculation is the value of informal neighbourhood commercial properties: workshops, workspaces, shops and small business premises which are not part of the high quality commercial real estate universe that constitutes global property markets, but which are important components of economic growth and prosperity, especially in emerging markets.  They are almost impossible to value at a global level but have huge potential for future investment as economies mature and real estate markets develop within them, adding to the global stock.

This year, for the first time, the value of agricultural land and forestry is also included in the Savills measurement of total world real estate at an estimated US$26 trillion, of which around 30% is corporately and institutionally invested. Most agricultural and forestry land is owned by non-investing entities, operators and occupiers, especially in emerging economies where this is a sector with great potential for further growth and investment.

Global real estate universe in comparison Table: globalrealestatecomparison

Breakdown of developed global real estate’s total value Table:  breakdowndevelopedrealestate