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Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services.
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Investment and Insurance Products   • Are NOT Deposits  • Are NOT FDIC Insured  • Are NOT Insured By Any Federal Government Agency  • Have NO Bank Guarantee  • May Go Down In Value  
Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any security or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance that any investment, financial or estate planning strategy will be successful.

Private markets. Sounds like a secret club. And in many ways, it is—but today we are going to lift the veil of secrecy and let light in upon the mystery. To help break down this complex topic, we have Senior Portfolio Manager Jordan Strauss and Senior Research Analyst Julian Freeman. 

Let’s first lay out the basics. Julian, what exactly is meant by private markets investing—and how does it differ from public markets?

Private markets (PM) fits within the alternatives asset class. It’s outside of the traditional stock and bond world, where information is often readily available. Here, investing generally involves providing equity (buying an ownership interest) or debt (loaning money) to companies that aren’t traded on public exchanges. To gain access to this exclusive space, investors generally participate in a PM investment fund. PM funds are typically structured as drawdown funds, where a limited partner (the investor) will make binding commitments of capital that the general partner (the fund manager or GP) will call down as investments over what’s referred to as the fund’s commitment period, ordinarily around four years. Following the commitment period, GPs focus on growth and value creation of the portfolio companies they own. As GPs exit investments, they return capital to limited partners.

A key distinction between public and private markets is that the latter offers access to far more opportunities. There are about 4,000 publicly listed stocks traded on U.S. exchanges (a number that has been declining), but there are hundreds of thousands of private companies in the U.S. With such breadth of opportunity, PM fund managers often deploy focused strategies, targeting companies that would benefit from their specialized knowledge and core competencies. Ultimately, investing in PM can offer the opportunity for higher returns and/or increased portfolio level diversification. These are often the factors that drive investors to consider PM investing.

Private funds are available only to certain investors who meet the specific income, experience, and investable assets thresholds set forth by the U.S. Securities and Exchange Commission’s definition of “accredited investors” and/or “qualified purchasers” as necessary.

These types of investments may use aggressive investment strategies, which are riskier than those used by typical mutual funds and you may lose more money than if you had invested in another fund that did not invest as aggressively.

Investments that focus on alternative assets are subject to increased risk and loss of principal and are not suitable for all investors.

Please see additional  important disclosures at the end of the article.

Disclosures:

    • © 2024 M&T Bank and its affiliates and subsidiaries. All rights reserved.
    • Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), Wilmington Trust Asset Management, LLC (WTAM), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through M&T Bank Corporation’s international subsidiaries. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank. Member, FDIC. 
    • M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.
    • WTIA, WFMC, WTAM, and WTIM are investment advisors registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, WTAM, and WTIM is also available on the SEC's website at adviserinfo.sec.gov. 
    • Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services.
    • M&T Bank  Equal Housing Lender. Bank NMLS #381076. Member FDIC. 
    • Investment and Insurance Products   • Are NOT Deposits  • Are NOT FDIC Insured  • Are NOT Insured By Any Federal Government Agency  • Have NO Bank Guarantee  • May Go Down In Value  
    • Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any security or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance that any investment, financial or estate planning strategy will be successful.

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