How Do We Balance Private Capital Investments in Client Portfolios?

This article is featured in our Private Capital Guide. 

How do we balance private capital investments within your portfolio? 

A mixture of diversified, focused, and concentrated investments across asset classes provides a solid foundation for growth. 

Our private capital portfolios seek to provide clients with diversified exposure to different types of investments within asset classes. As your portfolio grows, we provide additional investment opportunities, including broadening exposure across sub-asset classes and co-investing directly alongside world-class managers. All the while, we identify investments aligned with our intergenerational themes. 

The Core-Moon-Satellite Model 

• ‍Diversification: The portfolio’s core provides broad market exposure, while moon and satellite holdings target specific sectors or themes, further diversifying the portfolio.‍
• Enhanced Return Potential: The combination of a diversified core portfolio and strategically chosen moon/satellite holdings can enhance the overall return potential of the investment portfolio.‍
• Flexibility: Our moon/satellite investments change over time based on changing market conditions, economic outlooks, and opportunities, creating a dynamic investment strategy. 

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‍Diversified

You can invest in our model with any amount of capital. You’ll start with a diversified portfolio, providing broad exposure to our three main asset classes with the potential for opportunistic investments. Within each asset class, you’ll invest in diversified funds with balanced exposure.

‍Example: A private real asset diversified holding might be comprised of real estate within multifamily, industrial, office, and retail properties.

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Focused

On the focused level, asset selections incorporate our intergenerational themes. You can think about these investments as special occasion wines — saved for birthdays, anniversaries, and celebrations.

Example: Investing in private real estate in the Sun Belt.

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‍Concentrated

On the concentrated level, investments can be specialized funds or specific companies. These investments incorporate intergenerational themes. They are like the very special, very rare wines saved for milestone birthdays and anniversaries.

Example: Investing in a medical office in the Sun Belt — encompassing multiple intergenerational themes.

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‍Case Study

What does this model look like in action? Here’s how we set it up for Private Infrastructure, a subset of Private Real Assets: 

• ‍Diversified: A broad group of funds with global exposure to communications, energy, and transportation.‍
• Focused: Emphasized the intergenerational theme of decarbonization by selecting funds exposed to the transition into clean energy.‍
• Concentrated: Made one investment in a fund building small-scale solar panels in the northeast. 

Why Balentine?

Protecting and growing your wealth for generations requires a strategic approach defined by discipline and experience. 

We Are Process-Driven, Not Product-Driven

Your best interests should guide your private capital portfolio, and we keep your needs in focus with data-based, custom solutions. What makes a discerning guide?  

We Are a Disciplined Fiduciary

As you strive to protect and grow your wealth, you deserve a partner dedicated to putting your needs first. With our time-tested guiding philosophy as the foundation for your custom portfolio, your investment is protected from fads.  

Advice, Not Products:

Traditional wirehouses often charge a placement fee and an ongoing yearly fee for private capital investments. In contrast, we’ve modeled our private capital offering on advice — not products. We never charge fees for investments, so we are not incentivized to put clients into private capital vehicles, and we only recommend funds to investors who are an appropriate fit. 

Incentives Aligned With Yours:

We do not chase the latest trend or the best-performing fund. Instead, we follow our discipline, thoughtfully selecting asset classes we believe are poised to outperform, partnering with rigorously vetted managers, and curating bespoke portfolios that balance your liquidity needs, portfolio size, and time horizon. In addition, our employees invest in our recommended funds and internal partnerships, creating alignment with our management of the fund.  

Bespoke Funds:

Accessing top-level private capital managers can be difficult, so when it becomes impossible for our clients to access managers directly, we create internal partnerships and pool client money to face the private capital fund. We do this at no additional profit, seeking only to cover the cost of the partnerships. 

We Are Experienced & Opportunistic

Sometimes, one-off investment opportunities present themselves. With our years of experience in private markets, we can help you confidently navigate them. 

Direct Deals:

With wealth comes opportunity, and you have likely been approached directly to invest in new companies, properties, or deals – though you may not know exactly how to evaluate them. We review hundreds of opportunities on behalf of clients, and we welcome the opportunity to analyze your family opportunities. We know we do not have a monopoly on good ideas and approach outside deals with an unbiased analysis. It is our goal to provide you with the confidence and discernment to say no, the courage to say yes, and a recommendation of how much to invest based on a total view of your wealth picture.  

Tactical Allocations:

Entrepreneurs understand the importance of aligning opportunity with action, and we constantly assess the marketplace for mispriced opportunities that provide asymmetric payoffs for our clients. We are built to move quickly on these deals as they are typically not long-lasting. For example: we implemented a partnership to buy distressed hotels at the end of 2020 when COVID caused significant disruption to the hospitality industry. In addition, we launched Credit Opportunities 2023 as a partnership to take advantage of the dislocation caused by the sharp increase in interest rates.  

Team Tenure:

Decisions about your custom portfolio are made by a core team that has worked together for over half a decade and brings a combined 60 years of experience in private capital. This means you can rest assured that there is alignment and longevity in our private capital program. In addition, we continue building the team, adding bandwidth and depth in operations and analysis. 

Worked As Fund Manager:

As one of the few advisory firms that has actually “sat in the chair” as private equity investors, we are proud to have experience building Private Capital platforms for some of the largest hedge funds and families in the world. This means we understand the qualities that make for a good general partner and private capital firm. We bring this firsthand knowledge to bear in the decisions we make for our clients.

How Can We Help?

If you’re wondering how private capital could fit into your portfolio, are interested in learning more about opportunities within the intergenerational investment themes, or simply want to discuss the right portfolio allocations to protect and grow your wealth for generations, our team is here to help. It would be our honor to discuss your unique situation and answer any questions you might have. Please don’t hesitate to reach out.

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