Hi Bogleheads - I have an opportunity through my employer, a very reputable private equity firm, to coinvest on deals alongside the funds. The fee on the funds are typically very high (think 2 and 20) but I’d have access with no fee. Additionally, there is a program for me to obtain leverage ($2 of leverage for every $1 I put in) at a prime +1% rate (currently works out to about 7-8%). Lastly, participating in this would complicate filing taxes. I currently do my taxes myself but doing this would result in $2-3k in tax preparation costs a year.
About the investments, they’re illiquid investments with 5-10 year investment periods. The funds typically have 20-30% IRR. the strategy I'm interested in is a biotech fund that is largely uncorrelated to the market and more correlated to drug trial results. Historically the investments have a 70% chance of doing 3x over 4 years (50% IRR) and a 30% chance of going to zero.
My questions are:
1. Is it worth it to participate in this program? I have a 30-40 year investment horizon so I don’t mind the illiquidity. The alternative is I put this money in VTI/vxus. This would be about 40% of my portfolio.
2. Is it worth it to take the leverage option?
About the investments, they’re illiquid investments with 5-10 year investment periods. The funds typically have 20-30% IRR. the strategy I'm interested in is a biotech fund that is largely uncorrelated to the market and more correlated to drug trial results. Historically the investments have a 70% chance of doing 3x over 4 years (50% IRR) and a 30% chance of going to zero.
My questions are:
1. Is it worth it to participate in this program? I have a 30-40 year investment horizon so I don’t mind the illiquidity. The alternative is I put this money in VTI/vxus. This would be about 40% of my portfolio.
2. Is it worth it to take the leverage option?
Statistics: Posted by 25millz — Sun Jan 14, 2024 4:42 pm — Replies 5 — Views 382