Investors can now allocate retirement assets to top-performing private market funds through Gridline multi-manager portfolio vehicles, the most efficient mechanism for achieving diversification in the alternatives market.
Through a partnership with Millennium Trust Company, Gridline can increase retirement portfolio diversification and reduce portfolio risk by expanding allocations to alternative assets, including Buyout and Venture Capital, asset classes that have historically outperformed public markets.
Today, most Employee Retirement Income Security Act (ERISA) money is effectively going into passive ETF strategies deployed across the public equity and fixed income marketplace. This drives a constant bid into historically over-inflated public markets, with asset values fueled by a long-term low-interest bull market run and a rise in corporate buybacks of stock.
Over-concentrating a retirement portfolio with any one asset class, sector, or region exposes investors to greater market volatility and the potential for larger losses. Individuals nearing retirement age are especially vulnerable to market downturns, as they have less time to recoup their losses.
Actively managed private equity funds align with the strategy of retirement investing. They have historically higher returns than public markets. VC fund of funds have consistently outperformed the S&P 500 and Russell 2000 PMEs, and private equity funds generated an extra 83 cents per dollar invested compared to the public markets.
Sophisticated endowments and family offices have outperformed traditional benchmarks for decades by augmenting portfolios with access-constrained alternative assets. The advantage these institutional investors have over Main Street investors is a long-term view of investing.
Private market investments often come with a lock-up period of up to ten to twelve years, though disbursements can begin as early as year five or six. Retirement funds are already inherently illiquid, so benefit from expansion to asset classes that include an illiquidity premium – the higher return investors expect to earn for an illiquid asset.
The longer time horizon of retirement investing combined with the power of compounding enables retirement investors to build outperforming, diversified portfolios of best-in-class alternative fund managers, supported by Gridline’s institutional-quality selection and diligence process.