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New Fund Offers Individuals Access To KKR Buyout Deals
I use LPEFX for my exposure to listed private equity firms. Currently, LPEFX makes up about four percent of the growth area on my portfolio and I am thinking of raising this, over time, to about six percent.
I have linked the fund’s fact sheet along with its M* report for those that might have an interest in private equity.
This is only going to be offered to accredited investors. However, it is interesting from the standpoint of allowing to invest in KKR funds without investing in KKR itself and the K-1 that comes with it.
I'd like a fund of funds that can invest in private equity funds across multiple companies and is a mutual fund.
I'll continue to stick with OAK and BX, the latter having become a larger position than I initially planned given that stock's volatility.
Also, with the KKR fund, there is a two year lockup.
@old skeet, lpefx is interesting fund, it's holdings are mostly public traded private equity managing companies who profit from the assets they are managing, the money you invested in this fund don't directly investe in the private buyouts, am I right on this? Is the Altegris new fund Ted linked different?
About LPEFX, with a 5.5% front-end load and a 1.59% ER I personally don't find anything interesting about this fund at all. That'a a 7.09% deficit from the start that an investor w/o access to a load waiver has to jump over to even begin to make any return. Also, assuming M* (and this is one BIG assumption) has this dog placed in the appropriate category, the fund trails it's category badly. I'd pass and just hold a few of the entities outright but to each their own. Disclosure: I own BX & KKR.
About LPEFX, with a 5.5% front-end load and a 1.59% ER I personally don't find anything interesting about this fund at all. That'a a 7.09% deficit from the start that an investor w/o access to a load waiver has to jump over to even begin to make any return. Also, assuming M* (and this is one BIG assumption) has this dog placed in the appropriate category, the fund trails it's category badly. I'd pass and just hold a few of the entities outright but to each their own. Disclosure: I own BX & KKR.
I think what concerns me about this fund is that - as you noted - you get everything, and that includes both the good (the A-list, like KKR, BX, OAK and a few others - including Brookfield and Danaher) along with some of the London traded PE funds, as well as some other entities, which are a mixed bag.
Owning the individual entities has issues (K-1's, although not with all of them - BAM and Danaher, for example) but ultimately that's what I've gone with. The individual names often provide quarterly dividends, too, which is what I'm looking for and I suppose this is just such a tricky and volatile industry that there is something to going with the biggest and best versus the whole thing.
Again though, just me.
Long BX, DHR, OAK and BPY. I've pondered Onex and a few of the other things. However, I'm probably done after making BX a larger position than I'd initially imagined it being. Private equity investments are quite volatile and not for conservative investors.
Scott - +1. The compositions of funds like these and similar always give me pause. As you noted, you get the A-list and the rest. Also, and I think I speak for both of us in this regard, when 'yield' may provide the greatest attraction these collections generally come up quite short to actually holding the cream of the crop or selecting a subset of own's own choosing. I see it in MLP funds as well as dividend or high-yield focused funds. I know selecting unique securities proves worrisome to many but I'm OK with it. To each their own.
I was off the board most of the weekend and with this I am sorry about the slow response.
You both make some good comments; however, the three year (19.9%) and five year (12.3%) performance for the fund (LPEFX) place it within the top ten percent of its category. During the past year, or so, many private equity firms have been under government review and with this the performance of private equity has somewhat waned.
I think LPEFX is a neat specialty fund to own and it has put some good money in my pocket over the past five years. During this time it has put about 33% of what I have investested back into my pocket plus I am currently carrying 49% in unrealized capital gains. It has indeed been a good cash cow. Plus there is no K-1.
And, although it might not be right for you … for me … it’s a keeper.
Looking at M*, I see that performance of LPEFX during the market crisis of 2008 was simply horrible: It lost 73%, and it recovered only in 2014. Any idea how it will behave in the next crisis?
Based upon my current position in this fund (LPEFX) and what it has already put in my pocket I'd most likely exit the position in a good market downdraft. Currently, it's nav is about $7.00 per share and I'd be getting out back of $6.00 on a (market) drop in nav. Natually, if it made a distibution of $1.00 this is much different than a drop in nav due to a price decline in the markets.
It's probally not for those that are not prepared, or have no plan in place, to deal with price declines usually found when market votality picks up.
The fund has to drop a good bit in its price before it become a net loser for me. Making money has as much to do with when one buys into a security just as much as when they chose to exit. So with its good price decline found back in 2008 this was a good entry point and if one wanted to exit, now might be a good time. But, I currently plan to stay with the position. Another time to enter was also found in 2011.
And, although it might not be right for you … for me … it’s a keeper.
Old_Skeet
I wouldn't even say right or wrong, more just different. Some of it comes down to the idea of how much is it worth it to you to avoid a K-1. The other issue that I think really weighs in my mind is that private equity is a very volatile and tricky investment class and I personally would rather go for the biggest. LPEFX does offer access to some investments that I think aren't even available as foreign ordinaries, such as the Harbourvest Fund that I believe is LPEFX's largest position.
Lastly, it comes down to the idea of what your time horizon is. You've done well and I'm glad you have with this fund. It has done better in the last year or two and hopefully it will continue, but it is down 27% since inception, according to Yahoo Finance. If you're looking for long-term, I do tend to favor the larger individual players. However, with a shorter-term time horizon and an exit strategy, if this fund is working for you, great.
Again, not right or wrong just different approaches.
Comments
I use LPEFX for my exposure to listed private equity firms. Currently, LPEFX makes up about four percent of the growth area on my portfolio and I am thinking of raising this, over time, to about six percent.
I have linked the fund’s fact sheet along with its M* report for those that might have an interest in private equity.
http://www.lpefund.com/documents/pdfs/alpsredrockslistedprivateequityfund-fs-20141231.pdf
http://www.morningstar.com/funds/XNAS/LPEFX/quote.html
I wish all … “Good Investing.”
Old_Skeet
I'd like a fund of funds that can invest in private equity funds across multiple companies and is a mutual fund.
I'll continue to stick with OAK and BX, the latter having become a larger position than I initially planned given that stock's volatility.
Also, with the KKR fund, there is a two year lockup.
Is the Altegris new fund Ted linked different?
Owning the individual entities has issues (K-1's, although not with all of them - BAM and Danaher, for example) but ultimately that's what I've gone with. The individual names often provide quarterly dividends, too, which is what I'm looking for and I suppose this is just such a tricky and volatile industry that there is something to going with the biggest and best versus the whole thing.
Again though, just me.
Long BX, DHR, OAK and BPY. I've pondered Onex and a few of the other things. However, I'm probably done after making BX a larger position than I'd initially imagined it being. Private equity investments are quite volatile and not for conservative investors.
I was off the board most of the weekend and with this I am sorry about the slow response.
You both make some good comments; however, the three year (19.9%) and five year (12.3%) performance for the fund (LPEFX) place it within the top ten percent of its category. During the past year, or so, many private equity firms have been under government review and with this the performance of private equity has somewhat waned.
I think LPEFX is a neat specialty fund to own and it has put some good money in my pocket over the past five years. During this time it has put about 33% of what I have investested back into my pocket plus I am currently carrying 49% in unrealized capital gains. It has indeed been a good cash cow. Plus there is no K-1.
And, although it might not be right for you … for me … it’s a keeper.
Old_Skeet
Based upon my current position in this fund (LPEFX) and what it has already put in my pocket I'd most likely exit the position in a good market downdraft. Currently, it's nav is about $7.00 per share and I'd be getting out back of $6.00 on a (market) drop in nav. Natually, if it made a distibution of $1.00 this is much different than a drop in nav due to a price decline in the markets.
It's probally not for those that are not prepared, or have no plan in place, to deal with price declines usually found when market votality picks up.
The fund has to drop a good bit in its price before it become a net loser for me. Making money has as much to do with when one buys into a security just as much as when they chose to exit. So with its good price decline found back in 2008 this was a good entry point and if one wanted to exit, now might be a good time. But, I currently plan to stay with the position. Another time to enter was also found in 2011.
Old_Skeet
Lastly, it comes down to the idea of what your time horizon is. You've done well and I'm glad you have with this fund. It has done better in the last year or two and hopefully it will continue, but it is down 27% since inception, according to Yahoo Finance. If you're looking for long-term, I do tend to favor the larger individual players. However, with a shorter-term time horizon and an exit strategy, if this fund is working for you, great.
Again, not right or wrong just different approaches.