Global Investment Funds

“People I met at cocktail parties in the ’90s used to ask me, ‘What’s your favorite stock?’ Today, at those same parties, they’ve updated the question to: ‘Which fund are you investing in?'” — Robert Picard, Head of Alternative Investments at wealth management firm Hightower Advisors

The investment landscape has undergone a significant transformation in recent years. Alongside “traditional” investment channels, alternative (non-traded) investment assets have emerged as synonymous with diversification and stability in a portfolio. Yet this trend is not new to everyone — for many years, the endowment funds of elite U.S. universities, which are pioneers in adopting advanced investment strategies, as well as the world’s leading investment institutions, have been allocating ever-growing portions to the non-traded sector — at the expense of exposure to public markets.

The reason this conversation has gained significant momentum in recent years is that access to leading international funds has, for the first time, extended to qualified private investors.

These sophisticated investors recognized the importance and contribution of incorporating non-traded assets into the investment mix. Since then, a rapid and consistent growth trend has been observed in the supply and volume of assets in the industry, as well as an ever-increasing share of these assets in investor portfolios. The reasons are numerous, and some stem from structural changes in the market. In the past, the key principle of any investment portfolio was the combination of stocks and bonds as two inversely correlated assets — but this thesis has crumbled in recent years and its effectiveness has eroded accordingly.

Furthermore, the ability of investors to diversify capital into international markets — and thus counter the “home bias” phenomenon, which involves investing most of one’s capital in one’s country of origin — has increased the motivation to capitalize on opportunities in thriving markets overseas.

Another contributing factor is the strong correlation that exists between traded markets, meaning that fluctuations in one market affect another — an effect that leaves investors exposed to essentially the same risks, and primarily to ongoing volatility. In the non-traded world, this correlation is neutralized, as assets behave independently of one another — an element that significantly reduces portfolio volatility and allows those investments to perform and generate stable returns across changing market conditions.

A Wide Range of Strategies, Models, Markets, and Assets

Private investment funds have, over the years, expanded the circle of investment opportunities for private investors into directions, sectors, and worlds that were previously out of reach. These funds offer a broad spectrum of strategies, markets, assets, and business models that allow investors to smartly capitalize on dominant global trends — for example, through Private Debt funds.

Global growth driven by increasing demand for credit solutions has created strong market fundamentals for debt funds, which are enjoying growing market share in the world of private credit — an alternative to traditional bank lending — a trend that is already reshaping the map of players in the global credit market. That said, debt funds operate across a wide range of business models and differ in the type, structure, and layer of debt in their loans, and accordingly carry different risk profiles — which must be precisely matched to the nature and needs of each investor.

Another strategy enjoying a growth trend — recently named the leading investment strategy in the Private Equity world in 2023 by fundraising volume — focuses on acquiring stakes in successful private companies across various sectors, in what is known as the Secondary market. The secondary market essentially allows managers and investors to step into the shoes of holders of stakes in private assets and companies. In practice, the secondary market creates a liquidity solution in the non-traded world and functions as a kind of enormous “second-hand” market spanning many industries — with the volume of such transactions expanding greatly in a challenging economic environment that amplifies the need for liquidity through asset sales, both traded and non-traded.

Unsurprisingly, another growing area is the world of Infrastructure and investment in large-scale global projects. Economic growth consistently relies on the need to develop and upgrade infrastructure facilities as vital foundations for its functioning and development. The close link between the two, supported by global processes and demographic trends, is evident in the accelerating volume of investments flowing into the infrastructure sector over the years — a multidimensional field spanning a variety of segments and industries, including energy (green and traditional), transportation, ports, airports, networks, and more — generating a deep market rich with investment opportunities.

Infrastructure assets are largely considered yield-generating base assets, involving ongoing or partial operation, generating continuous cash flow alongside long-term appreciation and value creation potential. Furthermore, these assets have a defensive character, operating in a relatively low-competitive environment with continuous, strong, and stable demand — even during periods of economic weakness. National and private projects are partially supported by government budgets and incentives, providing particularly strong safety cushions.

In essence, the offering of international investment funds enables qualified investors to capitalize on thriving sectors and markets and optimally address the needs and requirements of each investor — adopting dynamic and innovative approaches that respond to evolving market trends and conditions, while leveraging opportunities across borders, sectors, and asset types, in order to generate alpha returns for the qualified investor community.

Conclusions for Investors

Among the many advantages of investing in international alternative funds, a standout benefit is the ability to invest in dominant markets around the world and enjoy effective geographic diversification. International funds — a vital component in any investment mix — offer exposure to markets in thriving economies and provide investors with effective portfolio diversification: both through investment outside the stock exchange and through the ability to reduce exposure to local market turbulence while capitalizing on opportunities in flourishing regions and sectors overseas.

This approach has proven to have significant potential to improve portfolio performance, as enriching the mix with these advanced channels exposes qualified investors to investment strategies and trends that are gaining momentum in diverse markets — exposure that is not necessarily accessible through the traded market. Despite all of the above, the central challenge for any qualified investor is naturally the ability to access those leading international funds, as entry barriers are extremely strict. This is where Value Advanced Investments enters the picture, managing the entire operation end-to-end for qualified investors in Israel.

Paving the Way to the World’s Top-Tier Managers

The expertise of VALUE Advanced Investments Group, built over many years as part of its activity under the umbrella of institutional entities, lies in the ability to forge close connections and relationships with leading fund managers in their fields — paving the way for qualified investors in Israel to invest in the world’s largest and most respected funds, while tailoring the fund and investment character to the objective function of each investor. VALUE has set rigorous standards regarding its operating policies, leveraging its extensive experience and accumulated knowledge to create meaningful connections with major organizations backed by reputation, track record, and proven performance — achieved over many years of navigating market cycles of both downturn and growth.

These connections involve the dedication of significant resources and creative, pioneering thinking. (Value is known as a pioneer in introducing innovations to the local market, including, among others, secondary funds, feeder funds, open-structure funds, and many others) — all in order to ensure, as much as possible, that investors are entrusting their money to the hands of the world’s leading managers, who have clearly proven themselves worthy.

In summary, international alternative funds have established themselves as an essential and natural component in the portfolios of qualified investors seeking to benefit from a wide range of advanced investment strategies, thriving markets and sectors — in order to enjoy a dual bottom line: effective risk diversification alongside investment in channels that embody the potential to generate excess returns throughout the entire investment lifecycle.

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Disclaimer: The information in this article constitutes a general presentation of data and does not constitute a “public offering,” investment advice, or investment marketing, and is not a substitute for investment advice tailored to the individual’s data and needs. Past fund performance does not guarantee future results.