Tectonic Advisors assists its clients with building a portfolio of private investments, which is sometimes done in conjunction with its affiliate Sanders Morris Harris LLC. We strongly believe in private investments, if suitable and appropriately done, given the significant incremental returns that they can add over time to a client’s portfolio. In developing a private portfolio, we help each client understand the risks and rewards and determine – based on age, liquidity needs, risk tolerance and other factors – whether private investments fit. If so, we help develop a systematic plan that involves:
- Size of private allocation
- Diversification (as to type of private investment)
- Vintage year
Vintage year is year the investment was made, which has a significant impact on the future returns of the investment. That is, it is unlikely that an investment in private technology during the Tech Boom of 1999 made money given that valuations were high. Accordingly, it is best to spread a client’s private investments over a multi-year time frame so that the client is not concentrated in any one vintage year. In this regard, our experienced private equity team can assist clients in building a portfolio that can add incremental returns without interjecting too much additional risk in a portfolio.