Over my many years in both capital markets and wealth management, I’ve learned that exclusivity has played a major role in shaping the investment industry and the products being developed and marketed to investors.
Looking back, these offers are nothing new. In the 1970s and early ’80s, it was commission-based stock trading that was being marketed to regular investors . That was eventually replaced by high-fee mutual funds and then the “2 and 20” hedge fund model took off in the 1990s and 2000s. The hedge fund world, too, has lost its appeal simply because short-term performance too often failed to translate over longer periods. According to an analysis by Axios, the S&P 500 has generated an average return nearly double than that offered by the average hedge fund since 2009. Not surprisingly, investors have reacted by pulling an average of $5.
However, having worked in capital markets and directly with large pension plans and family offices, I have seen first-hand how the best quality private investments rarely made it to private clients.