Wealthsimple this week unveiled its third alternative investing option for retail investors as the Toronto-based fintech firm continues to expand its suite of services.
Building on venture capital and private credit offerings, Wealthsimple is now offering private equity, or the ownership of a stake in a private company—unlike stocks, which are public by nature.
“The asset class can be a good option for investors with long investment horizons because of the potential for high returns,” Wealthsimple states online, citing an average annual return of more than 10% from 2001 to 2023—well above the global stock market’s 5.7%.
The company anticipates private equity to outperform the broader market by roughly 3%, net of fees, while acknowledging higher risk.
Wealthsimple has partnered with the wealth management group of the Liechtenstein royal family, LGT Capital, who will function as both a fund manager and co-investor.
This structure “makes them highly incentivized to manage for returns instead of simply gathering assets to collect more in fees,” the fintech notes.
Among the largest privately-owned asset managers in the world, LGT has since 1998 delivered annual returns averaging more than 18% (gross of fees).
Wealthsimple’s annualized long-term return target for its LGT-managed fund is 12% to 14% (net of fees), and is available to “Premium” and “Generation” clients with $100,000 or more in deposits, a long time horizon, and flexibility to deal with the fund’s relative illiquidity.
In addition to high-risk, high-reward investment opportunities, Wealthsimple has also this year bolstered its cash account and added stock lending to its mix of offerings.
The fintech was founded in Toronto in 2014.
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