Amadeus Wealth - List of Recommended Alternative Investments

Thank you for your interest in our work with alternative investments. AMS Wealth is a boutique registered investment advisor with expertise in alternatives.

The increasing popularity of the ladder derives from their non correlation to the stock and bond markets. You're looking at our abbreviated recommended manager list.

I'll be pleased to forward a copy of it upon your request, but allow me this opportunity to summarize it. The calls begin by showing the broad categories in bold, including private debt, private equity, multi-strategy, venture leasing, real estate, litigation, finance, co-investments.

If there's a circle before the fund name, that means they offer an offshore vehicle, which would be appropriate for non-US and US based IRA investors.

The columns then describe each fund's sector. For example, private debt can be first or second, lean, infrastructure, debt, mortgage, REITs, BDCs, or sector specific like cannabis debt or venture debt amongst others.

Private equity comes in many categories, including primaries, secondaries, funder funds, or even direct secondaries. As you can see, we're a fond of secondaries.

A topic for future discussion. Multi-strategy might combine credit with real estate. Venture could be early or late stage. Leasing is unique.

Where can you otherwise participate in the lease income from owning a helicopter? Real estate can consist of existing multifamily housing projects or ground up development, self storage, qualified opportunity zones, 10 31 exchanges and other areas.

Litigation finance can include investments in single case commercial litigation, making loans to law firms and other strategies. We can discuss investments at a later date.

Another recommended asset class not shown on the chart is energy. The next column shows the manager's articulated target return. These numbers are obviously not guaranteed, but were often achieved in prior iterations of the fund.

The preferred return or pref is the annualized return. The investor or limited partner must earn before the sponsor or general partner can earn their profit, often referred to as carried interest, which equals 20% of the profits.

The pre is often 8%, but sometimes can be higher or lower. The next column shows the distributable income, if any.

Generally private debt, real estate, and promissory notes. Pay income. The next column shows the minimum commitment you have to make to participate in these funds.

The ones with lower minimums are generally so-called 40 act, meaning they're registered with the s e C and can appear on a custodian's brokerage statement.

We use Charles Schwab Company for this purpose. The column labeled term Describes the length of time you have to commit to participate in the fund.

These can range anywhere from 90 days for some 40 ACT funds all the way to 10 years. For private equity where it says, for example, one year slash 90 days, that means there's a lockup for a year after which you can redeem with 90 days notice.

Alternative investments are substantially less liquid than stocks and bonds. However, the concept of the illiquidity premium is pertinent here. The latter suggests that if you're able to tie your investment dollars up for a period of time, history has suggested a premium can be earned above the liquid markets.

The life column is the capital call period. When you make a commitment to alternative funds, some funds will ask you to invest your entire commitment immediately, while others will do so over time.

So a fund might call your capital over time, private equity being the longest, which can be up to four or five years.

It is not uncommon, however, that since distributions of income or gains can be made during the capital call period, you can use these funds to meet future capital calls, so your actual out of pocket could conceivably end up being less in your commitment sometimes significantly.

Let's walk through an example this second. From the bottom in private debt Is a BDC or business development company making loans to companies in the middle market.

It has a target return of 13 to 15%, a 7% pre distributable income of eight and a half to 9%, a minimum commitment of $100,000 a one year lockup.

Afterwards, you can get out with 90 days notice and a capital call period of one and a half years. The target return is higher than the distributable income because the fund takes warrants alongside their loans providing for some equity upside.

I hope this introduction has been of help. Please get in touch if you'd like a copy of the complete list or would like to discuss how alternatives can play a role in your portfolio.

Thank you.