Private Markets

Benefits of access via finpension

Are you interested in private markets? Then finpension is the right place for you. We offer you exclusive access to private market investments with several interesting advantages:

• From 1 franc: As a rule, private market investments are only accessible to very wealthy individuals. Not so with finpension. With finpension, you can benefit from the opportunities of this special investment category for as little as one franc.
• Lower fund costs: With finpension, you can invest in the institutional classes of these funds. The advantage of the institutional classes is the lower fund costs. The management fee of the funds is between 0.25 % (Partners Fund) and 0.45 % (Schroders) lower than in the non-institutional class. In addition, the performance fee of the Partners Fund is 2.5 % lower in the institutional class, which corresponds to a further advantage of 0.25 % at ten percent performance (Schroders has no performance fee).
• No paperwork: Other providers such as banks often require a large number of documents and complicated forms before access to private market investments is granted. With finpension’s investment solution, you are spared the paperwork. All formal requirements are prepared in a simple and comprehensible way and displayed digitally.
• No additional fees: We do not charge any additional transaction or custody fees for investing money in private market strategies.

Access to private market assets

Private market investments have special characteristics. Please read below to whom and how private market investments are offered at finpension.

Who are private market investments offered to?

Compared to financial products that are publicly traded on a stock exchange, private market investments entail higher risks. For this reason, the «Private Markets» investment focus is only available to customers who have a very high-risk tolerance.

How do I go about investing in private market investments?

Proceed as follows if you wish to invest in private market investments with finpension:

1. Select the strategy selection mode «Self Select» and then the investment focus «100% Private Market».*
2. Open additional portfolios with other investment strategies if you only want to invest part of your assets in a private market fund at finpension. Then allocate your assets to the various portfolios according to your wishes.**

*If you do not have a very high risk capacity, you will not be able to see the ‘Private Markets’ investment focus. Private market investments are only accessible to people with a very high risk capacity.

**You can split your assets by dividing your deposits between the individual portfolios from the outset (each portfolio has a different reference number for deposits) or by instructing a transfer from one portfolio to the other afterward (using the «Payout portfolio» function via the context menu – the three dots – on the portfolio).

Own strategy for private market funds

In contrast to exchange-traded ETFs, private market investments are only issued at longer intervals. The same applies to redemptions of fund units, which are only processed by the fund provider after a longer lead time (e.g. three months) or may even be temporarily suspended for a longer period.

These long periods, until buy or sell orders are settled, are difficult to control for portfolio rebalancing. It is even more difficult for clients to understand when a portfolio deviates from the strategy over a very long time.

Due to these special characteristics of private market funds, portfolios with private market strategies function differently from normal portfolios. The following special features should be noted:

• Private market funds are always held individually (one fund per investment strategy and portfolio). Hence the name «100% Private Markets».
• Private market funds cannot be added to an individual investment strategy.
• The investment strategies of portfolios with a private market strategy cannot be changed. If you wish to make a change to the allocation of your investments, you must enter a transfer to another portfolio with a different investment strategy (using the «Payout portfolio» function via the context menu / the three dots on the portfolio).

Risk disclosure

Private Markets stands for private market investments. These include private equity (shares), private debt (bonds), private real estate (property) and private infrastructure (infrastructure).

Compared to financial products that are publicly traded on a stock exchange, private market investments entail increased risks.

Skills of the fund manager

When it comes to investing indirectly in the private market, such as through a private equity fund, the abilities of the fund manager play a critical role. It cannot be guaranteed that the manager of a private equity fund will be capable of securing appropriate investments and producing returns that align with the expectations of this particular form of investment.

Less regulation and a lack of transparency

Private market investments can be an attractive option for investors looking for higher returns. However, it’s important to understand that these investments are subject to less regulatory oversight, which can result in a lack of transparency. As a potential investor, it’s essential to consider the potential risks involved and do your due diligence to ensure that you are making an informed decision. By carefully assessing the quality of the investments beforehand, you can help mitigate these risks and make the most of your investment.

Difficult valuation of investments

It can be a tricky business to value private market investments. Unlike publicly traded investments, which have a readily available market value, the valuation of private market investments requires a deep understanding of multiple factors, making it a complex process. On top of that, there is a conflict of interest between reporting the best performance to attract more income and investments, versus the accurate valuation that can have the opposite effect. Fortunately, the providers of private market investments have the ability to temporarily restrict the sale of shares, thus avoiding a downward spiral. This is a reassuring step in the right direction, as it helps minimize the conflict of interest and ensures a more accurate valuation of private market investments.

Higher market risks

Like any other form of investment, private market investments also carry a risk of loss. The performance of private market investments is influenced by different factors, such as the economic environment, sector trends, and overall market sentiment. Typically, investments are made in future prospects, and there is a level of uncertainty involved. However, to minimize risk, investments in private markets are diversified across different companies and projects.

Higher individual risks

Companies that are eligible for private market investments may have higher debt levels and be more vulnerable to negative market movements, such as rising interest rates, than established companies. Additionally, private companies are at a higher risk of becoming insolvent and going bankrupt than publicly listed companies.

Low to no saleability

Private market investments can be challenging to value, which may lead to adjustments in the net asset value after the audited annual report has been prepared. As a result, funds may hold back a portion of the investor’s fund units if the investor has decided to redeem all of their units. For instance, 90% of the units will be paid out on the redemption date, while the remaining 10% will be retained for a specific period until the next audited annual report is received. Here’s an example: If the fund’s financial year ends in December, and the investor has indicated that they intend to redeem 100% of their units in March, only 90% of the redemption proceeds may be paid out at that time. The remaining 10% will not be paid out until April of the following year (i.e. 13 months later). This allows the fund enough time to evaluate the audited annual report after the balance sheet date in December.

Further information

Please consult the brochure Risks Involved in Trading Financial Instruments published by the Swiss Bankers Association (SBA) for further information on investment risks.