What are the features of private capital markets?

Private capital markets are known to be less volatile, more rewarding but also more costly. Thus, investing in them is not similar to putting your money in the public markets. If you are just starting out as a private market investor, it is quite natural to feel confused and wonder what hiccups lay in your path.

To help you avoid them with ease, here are 3 features of private capital markets -

1)These are typically long term markets

Since the public markets are easily accessible, they have a lot more volatility and volume when compared to the private capital markets. Due to this, it is possible for you as an investor to quickly buy and sell your publicly listed financial assets. However, the same can not be said for the private capital markets and one needs to consider staying invested in a private market financial asset for a relatively longer time range when compared to their public counterparts. You should also be aware of the lock-in period that many of the private market financial assets have and plan your finances accordingly.

2) They help you efficiently diversify your portfolio

Private capital markets give you access to a whole new range of investment opportunities. From investing in unicorn startups to established private companies, hedge funds, REITs, etc., private markets give you the opportunity to diversify your portfolio with precision, and that too at a relatively lower risk!

3) Private capital markets are not accessible to everyone

The majority of the private market financial assets are only accessible to accredited investors. Hence, the private capital market is not very democratic and the final price of the bought financial asset depends on the negotiations between the buyer and seller instead of market forces.

I hope this answer enlightens you about the features of private capital markets.


Source :- What are the features of private capital markets?

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