Today, getting a decent return on your investments can be a real challenge. However, private assets can enhance the risk-adjusted expected return of an investment portfolio.
- The current low interest rate environment has made investors look for returns outside traditional equity and fixed income markets, especially in asset classes which offer a liquidity premium. As a result, the demand for private assets is growing. For institutional investors and high-net-worth individuals, it is still possible to find investments that provide attractive returns, says Tero Tuominen, Managing Director and Head of Alternative Funds at Evli Fund Management Company.
Investments in real estate and unlisted equities
Evli’s alternative investment fund offering consist of real estate, private equity and infrastructure funds. Evli offers three property funds investing exclusively in Finland, as a local touch is key in this asset class:
- EAI Residential develops and builds rental houses on owned sites.
- Evli Healthcare responds to the current demographic trend of an ageing population by investing in healthcare properties.
- Evli Rental Yield invests in commercial real estate with a broad diversification.
Evli's Private equity funds are:
- Evli Growth Partners Fund I investing in the most promising growth companies in the Nordic and European markets.
- Evli Private Equity I and II investing globally in the highest quality and hard-to-reach private equity funds that invest their assets in unlisted equities through so-called buyout investments.
- Evli Infrastructure Fund I is Evli’s newest private equity fund. The fund invests globally in infrastructure assets.
Higher expected return with the same risk
- Private assets have become an essential part of a well-diversified investment portfolio, as expected returns can be increased without increasing risk. This is an advantage that is already utilised by most institutional investors and an increasing share of HNWI investors, Tuominen says.
As private assets are not actively traded, they are only suitable for investors who have a long investment horizon and who can accept illiquidity.
Not just investing, but owning
Private assets are in many senses a demanding and hands-on asset class, where targets are typically hard to access and individual investments are large. This is why funds are a good way for many to get exposure to this asset class.
- With private assets, it’s not about just investing, but about owning. Typically, we acquire substantial ownership or the entire asset, and we must be actively involved in managing it. It is also a very exciting market. For instance, Evli Growth Partners has a very interesting investment in TIER Mobility that is one of Europe’s leading e-scooter companies, Tuominen explains.
Evli's Alternative Fund portfolio management consists of a team of 17 investment professionals with a total AUM and the end of 2019 of EUR 855 million.
- Managing Director, Evli Fund Management Company Ltd, Head of Alternative Funds
- Married, two children
- Former endurance runner winning medals in the Finnish youth championships, today running in his free time. Other hobbies include martial arts such as Krav Maga and exercising with varying intensity.
– Maybe a background of endurance raises a person with a hard working culture, Tuominen contemplates.