In recent years, family offices and Registered Investment Advisors (RIAs) have faced an increasingly volatile and challenging investment landscape. The combination of fallouts from COVID-19, persistent inflation, and fluctuating market conditions has complicated the pursuit of stable, high-yield investments.
Economic environments like this often push traditional investment approaches to their limits, particularly for those managing substantial, diversified portfolios. Family offices and RIAs are not only grappling with preserving capital but also with generating sufficient returns to meet their long-term financial goals and commitments.
Family Office investors and RIAs are actively seeking novel avenues to secure returns that outpace inflation while also managing risk so that they can best serve their clients and justify their fees.
How MCAs Can Help Family Offices & RIAs
This article will cover how Supervest’s Merchant Cash Advances (MCAs) can speak to the multiple concerns of Family Office investors and RIAs. Unlike traditional fixed-income investments, which are currently facing the squeeze from inflation, Supervest’s MCAs present an opportunity to benefit from a different and potentially lucrative class of alternative assets.
MCAs offer a compelling alternative asset because they offer the dual benefits of diversification and potentially higher yields. This unique investment option stands apart by allowing investors to fund shorter-term advances to businesses with a promise of a portion of future revenue.
Our clients find this can be a component of their investment strategy which aligns the potential for high returns with a tangible impact on real-world businesses – ideal for Family Offices and RIAs who have a social impact mandate from their clients.
For family offices and RIAs, this approach not only opens up a new stream of income but also adds a layer of insulation against market volatility, all while contributing to the growth of other enterprises.
Market Insights
Current Trends
Over the last five years, the investment world has experienced unprecedented economic fluctuations, causing significant challenges for family offices and RIAs. Inflation has been a major concern, especially in the United States, triggering a tightening of global financial conditions and impacting return on traditional investments.
Persisting inflationary pressures have considerably diminished the attractiveness of conventional fixed-income investments like bonds and treasury securities.
Higher interest rates and inflation have upended millions of investors, causing the 60/40 portfolio to have its worst year in generations. The ongoing squeeze on traditional assets has forced Family Office investors and RIAs to re-evaluate their strategies in pursuit of higher yields, simultaneously seeking to maintain a degree of stability and capital preservation.
Moreover, heightened market volatilities have highlighted the need for assets that can perform independently of stock and bond market movements, emphasizing a distinct shift towards investments that can weather these financial storms.
Shifting Towards Alternatives
In response to these conditions, there is a growing trend among Family Offices and RIAs towards alternative asset investments. One such emerging alternative is the Merchant Cash Advance (MCAs).
Unlike traditional market-linked investments, MCAs offer an opportunity to invest in the future revenue of businesses, a proposition relatively untouched by stock market fluctuations.
This shift is indicative of a broader trend wherein investors who are looking to future-proof their client’s portfolios are increasingly diversifying into alternatives to counterbalance the potential downsides of a heavy equity- or bond-centric portfolio.
Data from Preqin shows that by the close of 2015, total alternative assets under management (AUM) were valued at $7.23 trillion. Fast forward to the end of 2021, and this number nearly doubled to $13.32 trillion.
Projections indicate that alternative asset AUM will continue its upward trend, increasing by approximately 11.7% to reach a remarkable $23 trillion by the year 2026.
The data indicates that the MCA market is likely to undergo an impressive rate of growth over the next several years. For Family Offices and RIAs who are looking for potentially high-yield growth options that make use of available short-term capital but also have future-proofing potential into the mid-term, MCA investments are worth considering.
Introducing Supervest’s MCA Investments to Family Offices & RIAs
Unique Features
MCAs involve advancing capital to businesses with the agreement that the advance will be repaid through a percentage of daily or weekly revenue. What sets Supervest’s MCAs apart is the rigorous vetting process, stringent due diligence on all merchants, and our strategic selection of businesses.
We focus exclusively on businesses that demonstrate strong, consistent revenue streams, all of which helps us to reduce investment risk.
Advantages
Higher Returns: One of the most appealing aspects of Supervest’s MCAs is the potential for higher returns compared to conventional fixed-income products. Our notes offer either a 10% or 12% target return, depending on what timescale you are interested in. In an era where even high-yield bonds often fail to match inflation rates, the double-digit return potential of MCAs presents an attractive proposition for yield-seeking investors.
Shorter Commitment Periods: Another key benefit of investing in MCAs through Supervest is the relatively shorter commitment period. We offer both a short-term 12 month note with a 10% target return and a mid-term 24-month note with a 12% target return. This feature can be particularly appealing to family offices and RIAs looking for more liquidity and flexibility in their investment strategies, compared to traditional long-term bonds or equities.
Reduced Market Correlation: Perhaps one of the most strategic advantages of MCAs is their low correlation with broader market movements. Given that the repayments are linked to the revenues of diversified businesses rather than stock market indices or interest rate fluctuations, MCAs provide a hedge against market instability. This characteristic can be particularly beneficial in adding a layer of security and balance to a portfolio, especially in turbulent market periods.
In summary, Supervest’s MCAs provide an attractive solution to prevailing challenges faced by Family Office investors and RIAs. By offering the potential for higher returns, flexibility, and a hedge against market volatilities, MCAs represent a thoughtful addition to HNW portfolios, aligning with both yield-centric goals and risk management strategies.
Features and Benefits Tailored to Family Offices and RIAs
Yields & Returns
The Short-Term and Mid-Term Notes by Supervest, yielding 10% and 12% respectively, represent a significant uplift compared to traditional investment avenues. These attractive yields have a substantial impact on overall portfolio performance, particularly for family offices and RIAs tasked with preserving and growing substantial assets under management.
Traditional fixed-income investments often yield returns that barely keep pace with inflation, diminishing real income and purchasing power over time. In contrast, the 10-12% yields provided by Supervest’s products not only offer a hedge against inflation but also contribute to the growth of the principal amount invested.
This performance is particularly critical for family offices and RIAs seeking to meet the long-term financial goals and commitments of their clients or family members keeping in mind legacy and philanthropic commitments.
Diversification and Risk Management
Investing in MCAs through Supervest offers more than just appealing returns; it provides a strategic path to diversification. Traditional investment portfolios predominantly focusing on stocks, bonds, and real estate are often subject to market uncertainties and economic cycles.
MCAs, by their nature, have a lower correlation with these traditional asset classes, enabling them to act as a buffer against market volatility. This attribute of MCA investments allows family offices and RIAs to spread risk more evenly, ensuring a more stable and robust portfolio performance across various economic conditions.
At Supervest, we also enforce a 5% maximum exposure cap to fortify the risk management inherent in how we structure our MCA deals. Maximum exposure limits are risk management tools used to help ensure the risk profile of an investment is spread wisely. This means that a maximum of 5% of your capital is allocated to any single deal.
Risk Assessment
The security of an investment is paramount, and Supervest addresses this through comprehensive risk assessment protocols. The due diligence process for selecting businesses for MCAs is rigorous, involving detailed analysis of financial health, revenue consistency, and growth potential.
Supervest’s credit assessment procedures assess the creditworthiness and past financial behavior of businesses, ensuring that only those with a solid track record and a high likelihood of continued revenue generation are selected. This meticulous approach to risk management fortifies investor confidence, assuring Family Offices and RIAs that the high yields do not come at the expense of excessive risk.
Investing in MCAs via Supervest can provide a dual advantage — attractive double-digit returns and robust risk management. These factors collectively contribute to the enhancement of portfolio performance while maintaining a balanced approach to risk. Our past performance is relevant to mention here – we have achieved 100% of our target returns through Q3 of 2023.
Re-cap on How Supervest Manages Risk
Diversification Across Funding Companies: Supervest allows investors to spread their capital across different MCA funding companies.
Diversification Across Thousands of Merchants: By distributing your investments, you can mitigate some of the risk of heavy losses if a merchant encounters financial hiccups.
Limit of 5% Exposure to One Cash Advance: Simply put, no single investment can consume more than 5% of your total portfolio on the platform.
Getting Started: Catering to Family Offices and RIAs
For family offices and RIAs looking to enhance their clients’ portfolios with Supervest’s high-yield Merchant Cash Advances, the path to getting started is clear and straightforward.
The minimum investment starts at $25,000, a figure strategically set to ensure meaningful participation while maintaining accessibility.
The process to begin investing is streamlined and user-friendly
Research and Review: Start by visiting our website to access detailed information about the available investment products. Here, you can find in-depth data on the Short-Term and Mid-Term Notes, including past performance metrics (again, we have achieved 100% of our target returns through Q3 of 2023), risk assessments, and redemption policies.
Registration and Investment: Once the decision is made, the next step is to register with Supervest. This process involves providing necessary details about the investing entity and agreeing to the terms of service. Following registration, selecting the desired note (Short-Term and/or Mid-Term) and making the investment is a simple transaction.
Ongoing Monitoring: After the investment, Supervest allows investors to track the performance of their investment, providing regular updates and reports.
Now is the time to act. With current market dynamics presenting both challenges and opportunities, the unique advantages of Supervest’s MCA products should not be overlooked.
Get in touch with us
Reach out directly to our expert team for personalized consultations, a free live demo, and to address any specific queries.
Supervest offers comprehensive guides and resource materials that provide deeper insights into MCAs, their structure, and their place in a diversified investment portfolio.
Customer Support
Understanding the nuances of alternative investments like MCAs can be daunting, even for professional Family Office investors and RIAs.
This is where our dedicated customer support and services play a key role in differentiating us in the market of alternative asset investment platforms. Available to guide investors through every step of the process, from initial inquiry to ongoing investment management, our expert team ensures that Family Offices and RIAs have the knowledge and confidence needed to make informed investment decisions.
This support is not just about answering questions but providing a partnership that contributes to the achievement of long-term investment objectives.
Investing in Supervest’s MCA notes represents a strategic choice for Family Offices and RIAs seeking higher yields, robust risk management, and portfolio diversification. With an easy-to-follow process, extensive support, and effective management tools, Supervest makes alternative investing a straightforward process.
Conclusion
Family offices and RIAs face significant challenges in securing stable, high-yielding investments. Merchant Cash Advances (MCAs) stand out as an attractive potential solution, offering a blend of attractive annualized returns, practical risk management, and much-needed portfolio diversification.
Throughout this discussion, we’ve highlighted the robust potential of Supervest’s Short-Term and Mid-Term Notes, with yields of 10% and 12%, respectively, which can significantly enhance portfolio performance.
The potential upsides of these investments are clear: higher returns, shorter commitment periods, and a strategic departure from the volatility and unpredictability of traditional markets. Importantly, we’ve also highlighted the safety measures and due diligence processes in place, maximizing the security of our MCA investment framework.
As we confront ongoing market volatility and inflationary pressures, the importance of incorporating alternative investments like MCAs into your client’s portfolio becomes more and more significant. Supervest’s offerings not only meet the demand for higher yields but also provide a reassuring level of stability and predictability.
We strongly encourage family offices and RIAs to take a proactive step towards diversifying their investment strategies with Supervest.
Connect with Supervest today to begin reshaping your investment future.
