QUESTIONS
Understanding private market risk
The investment case and the possibility of loss need to be considered together.
Private investments may be difficult to sell and can require capital to remain committed for an extended period. They may also provide less public information than registered public offerings. The value of an investment can decline, including to a total loss.
Risk varies with the business or asset, its financing, the investment structure and the rights held by the investor. Borrowing can amplify losses. Valuation uncertainty, fees, concentration and future funding obligations can also affect outcomes.
The strategy profiles describe selected considerations. They are not an exhaustive risk assessment and do not replace the documents for a particular investment. An investor's objectives, financial circumstances and ability to bear losses also matter.
Read beyond the headline objective
Liquidity
Understand transfer restrictions, redemption arrangements, expected holding periods and the possibility that an exit is unavailable.
Information and valuation
Examine the quality of financial information, valuation assumptions and the reporting available after an investment.
Obligations and downside
Review fees, borrowing, capital calls, concentration and the consequences of a weaker operating or market environment.
Background reading: SEC investor bulletin on private placements.