"Private equity is a pension aid for the young"

HSVX

I saw this interesting article in the FT, talking about how twentysomethings investing for their retirement don't currently have great options for investing for the ultra-long term 40+ years.

Here is a link to the article. http://www.ft.com/cms/s/0/4426d41c-2944-11e5-8db8-c033edba8a6e.html?siteedition=uk#axzz3fyht9IR0

The title is "Private equity is a pension aid for the young" for those of you who google FT articles then click on the link to get round paying the subscription (like me).

I was wondering if any of you had any thoughts on this? If you were investing for the ultra-long term, what would be your strategy?

bowlhead99

I'm one of the many people investing for the ultra-long term as I am under 40 and might have 60 years to spend the proceeds of my investments. Like others I am also saving for the medium and long term because I'll certainly be spending money in the medium and long term.

My portfolio includes private equity / venture capital investment trusts and other illiquid assets such as property and infrastructure projects via investment companies that specialise in that sort of thing. Geographically, I also have a reasonable exposure to emerging and frontier markets. And smaller companies. And some other future-looking sectors like tech or bio/pharma. All of these types of assets have long term potential and will not necessarily all be peaking and troughing at the same times as each other, so they can join the mainstream developed public market largecaps and midcaps in an equities-heavy portfolio.

Because we retail investors are somewhat restricted to investing in listed products - rather than private institutional funds which can draw down their money from investors on a just-in-time basis for investment opportunities as they present themselves - we're unlikely to achieve the same level of gross headline returns which some HNW or institutional investors have been able to get in their specialist concentrated funds during the boom times.

But there are plenty of funds out there which deliver (on average) greater returns than simple trackers investing in large public companies, because they are simply reaping the reward for greater risk, which is something that can pay off in the long term, while having potential to fail spectacularly.