Private Equity refers to an alternative investment entity that buys and builds private companies and assets that are not traded on the public markets.
Financial Glossary From Poolit
Are you looking to expand your alt investing knowledge? Learn with Poolit, as we’ve created a financial glossary that aims to increase investment transparency by making sense of industry terminology and jargon.
Alternatives
Alternative investments respond to different market influences than more traditional assets like stocks or bonds. This dynamic allows alts to diversify your portfolio while potentially reducing fluctuations along the way. Alternative investments are assets that constitute alternatives to traditional assets you’d normally find in your investment portfolio, such as stocks or bonds. Some of the more common alternative investments are Private Equity, Venture Capital, and Hedge Funds.
Alternative investments respond to different market influences than more traditional assets like stocks or bonds. This dynamic allows alts to diversify your portfolio while potentially reducing fluctuations along the way.
Private Equity
Hedge Funds
Hedge Funds are pools of investor monies that are managed by a fund manager, and that typically use more complex portfolio strategies to carry out a specific investment philosophy.
Venture Capital
Venture Capital is money raised by entrepreneurs to invest in startups, in order to initiate business operations and spur growth (think tech companies at their early stages, for example).
Accredited Investor
To be an accredited investor, you generally need to meet the following requirements: • Income of $200,000 ($300,000 jointly with a spouse) for two years, with reasonable expectation of earning the same or more in the current year. • Net assets of at least $1 million, excluding your home equity. • Certain financial and investment professionals with qualifying licenses.
Qualified Purchasers
A person or family business is generally considered a qualified purchaser if their investment portfolio reaches a value of $5 million or more, excluding a primary residence. Certain entities and individuals with control of more than $25 million in assets can also be considered qualified purchasers.
Liquidity
Liquidity refers to how easily an asset can be sold and converted to cash, without affecting its market price.
Fund Manager
A fund manager oversees and implements a fund’s portfolio strategy, based on guiding investment philosophy.