Ivy Invest’s First Year
Ask a CIO #28
With Thanksgiving falling late in November, the holiday season has felt unusually quick this year. We’re less than two weeks away from the end of 2024!
I’ll be taking off next week, so I’d like to take a moment to reflect on our year here at Ivy Invest. We built our business on a simple premise – individual investor portfolios typically look nothing like large institutional portfolios, but we think more should (or at least should have the option to). So we set out to create an investment solution for individual investors that is accessible, transparent, and importantly, easy to use.
As of this past March, Ivy Invest began offering an endowment-style portfolio, a portfolio constructed with public and private investments, directly to individual investors. It required launching a registered fund, building a portfolio, and building a new technology platform.1 Our technology platform will be fully available starting early next year.
As strongly as we feel about the premise of our work, I know that not everyone agrees. Not everyone believes that everyday investors need or should even have access to alternative investments. Plenty of institutional investors have said as much to me, and having lived in that world for over 17 years, I understand the objections.
Alternative investments comprise a huge landscape, including (but not limited to) private equity, venture capital, private credit, hedge funds, real estate, natural resources, and infrastructure. Even within each asset class, there are wide variations in strategies.
It IS complex to invest in these asset classes, even for institutional investors. It often takes years of experience and an existing network just to find the high quality managers in each asset class. Specialized knowledge is required to perform due diligence on these managers. And of course, that’s assuming the manager is willing to take a call and share information to begin with.
Then there are the higher fees and lower liquidity.2 Both are unavoidable facets of private markets investing. But as institutional investors know, for high quality managers, the tradeoffs can be worthwhile, and net returns historically have justified the costs.
I’ll be blunt – everyday investors are unlikely to ever individually acquire the access or expertise to understand alternative investments as deeply as institutional investors. But that also shouldn’t be the expectation. And it shouldn’t be the required cost of entry to a portfolio that institutions know may offer better risk-adjusted returns, and over time, better absolute returns over traditional stock/bond portfolios.
If the existing public market options are good enough for individuals, then they should be good enough for institutions. But we know that wealthy institutions and family offices have long since moved on from stock/bond portfolios, they’ve reaped the benefits of their more sophisticated portfolios, and they certainly are not heading back.
Why should everyday investors only choose from stock/bond portfolios that large endowments and foundations abandoned over 30 years ago? No investor is obligated to invest like an endowment, but let’s at least offer the option.3
As I mentioned, there won’t be a newsletter next week, so this is the last time you’ll hear from me in 2024. Wishing you all a joyful holiday season and Happy New Year!
Until 2025,
Wendy
The Fund is not designed to be a complete investment program and may not be suitable for all investors.
Investors often must also meet significant net worth requirements.
The Fund is not designed to be a complete investment program and may not be suitable for all investors.