NewVest, an innovative investment firm founded by finance academic Edward Talmor-Gera, has successfully raised $180 million for its latest fund, NewVest PE50 2024. This marks the firm's third capital pool, reflecting a growing trend towards passive index investing in private markets. The PE50 fund aims to provide investors with passive access to 50 of the largest private equity funds, emulating pooled returns while minimizing risk and costs.
Key Takeaways
NewVest has raised $180 million for its PE50 2024 fund.
The fund offers passive access to 50 major private equity funds.
NewVest aims to emulate pooled returns with a low-cost model.
The firm’s strategy is designed to appeal to institutional investors.
NewVest's Innovative Approach
Founded with the vision of becoming the "Vanguard of private markets," NewVest's PE50 2024 fund is designed to deliver a diversified, low-risk investment strategy. Talmor-Gera emphasizes that the fund aims to provide an annual vintage allocation, which allows investors to benefit from a broad exposure to the private equity market.
The PE50 2024 is NewVest's third index fund, following the successful launches of PE50 2023 and PD50 2023, which collectively raised $250 million last year. These funds have already deployed commitments to 92 of the largest private equity and private debt funds.
Performance Metrics
According to NewVest's analysis, private equity pooled returns have consistently outperformed median returns. Key performance metrics include:
310 basis points: Average pooled returns exceeded average median PE net returns from 2000-2017.
0.18x: Total value to paid-in metrics also favored pooled returns.
Talmor-Gera notes that approximately 70% of funds will underperform compared to pooled returns, making NewVest's strategy particularly appealing to investors seeking reliable returns.
Cost Structure and Investor Appeal
NewVest's fee structure is designed to be competitive, with no management fees and a carry-based fee ranging from 2% to 6%. This low-cost model is expected to enhance returns for investors, further solidifying the firm's appeal in the competitive private equity landscape.
The firm primarily targets institutional investors, including:
Insurers
Pension funds
Banks
Endowments
Family offices
Fund Allocation and Strategy
Investors in the PE50 2024 fund will gain exposure to 50 of the largest private equity funds, with allocations ranging from just under 1% to just under 6%, weighted according to each fund's target size. NewVest's strategy is to simplify the investment process for general partners (GPs) by being an easy limited partner (LP) to work with, minimizing the due diligence burden typically associated with private equity investments.
The Future of Passive Investing in Private Markets
As passive investing in private markets continues to evolve, NewVest is at the forefront of this trend. With major players like BlackRock expressing interest in bringing indexing and ETFs to private markets, NewVest's innovative approach positions it well for future growth. The firm's latest capital raise not only underscores the demand for passive investment strategies but also highlights the potential for significant returns in the private equity sector.
In conclusion, NewVest's successful fundraising for its PE50 2024 fund marks a significant milestone in the evolution of passive investing in private markets, offering investors a unique opportunity to access top-tier private equity funds with a focus on low risk and high returns.
Sources
NewVest raises third pool of capital for 'Vanguard of private markets' strategy, Private Equity International.