Asset Classes

Real Estate

Defined as land and any structures on it,real estate can be grouped into three broad categories: residential, commercial and industrial. Examples of real estate include undeveloped land, houses, condominiums, townhomes, office buildings, retail store buildings and factories. This asset class holds a unique position in the investment world in that, unlike other investments, it is dramatically affected by the conditions of its locality and surrounding areas. With the exception of a national or global recession, real-estate values are affected primarily by local factors such as the availability of jobs, crime rates, school quality and property taxes.

 

Private Equity

Private equity, meaning any equity capital that is not quoted on a public exchange, is an investment pool that serves to negotiate purchases of common and preferred stocks, subordinate debt, convertible securities and other securities of companies. It consists of investors and funds that make direct investments into private companies or orchestrate buyouts of public companies. Most private equity consists of institutional and accredited investors who commit large sums of money for extended periods of time to allow for improvements to a company in financial distress or a liquidity event such as a sale to a public company. Private equity firms will often facilitate leveraged buyouts, whereby large sums of debt are given to fund a sizeable purchase in a bid to improve a company’s financial status and increase is resale potential.

 

Venture Capital 

Venture capital is financial backing provided to early-stage, high-potential firms or businesses that commit to the company’s long-term growth and need assistance in gaining access to capital markets. Venture capital investments are typically high risk, but will often have the potential of large returns and come from wealthy investors and/or financial institutions. It is an ideal avenue for companies that cannot raise funds by issuing debt, but it often means that venture capitalists will have some control over company operations.