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How MCAs Fit into a High-Net-Worth Portfolio

October 10, 2023

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From our decades of working with high-net-worth clients in the alternative asset industry, we know that striking a balance between security and returns lies at the core of all investment strategies. In this blog, we outline how Merchant Cash Advances (MCAs) can fit into a strong high-net-worth portfolio.

Introduction: The Evolving Landscape of High-Net-Worth Portfolios

Gone are the days when a high-net-worth Portfolio was limited to stocks, bonds, and a sprinkling of real estate investments.

Today’s high-net-worth investors recognize the value of a diversified portfolio, understanding that in diversity lies strength. With the diminishing returns of the traditional 60/40 portfolio and the ongoing volatility in the US market, alternative assets are gaining greater prominence in sophisticated portfolios.

Data shows that ultra-high-net-worth investors, with a net worth of at least $30 million, invested a full 50% of their assets in alternative asset investments in 2020.

Let’s see what MCAs could do for you.

Wallet with dollars for ‘How Supervest MCAs Fit into a High-Net-Worth Portfolio’ portfolio
Alternatives are taking center stage. Photo by Crazy Motions.

The Power of MCA: Unpacking the Benefits for Investors

At its core, an MCA isn’t your traditional loan. Instead, it’s a financial model where businesses receive an upfront sum, which they repay using a percentage of their daily sales.

This dynamic and flexible structure contrasts with the rigid repayment schedules of conventional loans.

It’s these unique qualities that make them a popular choice for both merchants who are looking for operating capital and investors who are looking for a low-correlation alternative asset to diversify their portfolios.

Digital rendering of dollar coins for ‘How Supervest MCAs Fit into a High-Net-Worth Portfolio’ portfolio
MCAs can bring unique benefits even within the alts sphere. Photo by Crazy Motions.

MCA Investment Benefits for accredited and HNW investors:

  • Predictable Returns and Cash Flow: Unlike volatile stocks, MCAs provide a steady stream of income. Since repayments are based on daily sales, investors enjoy regular cash inflow, mirroring the business’s operational cycle.
  • Low Correlation with Stock Market: One of the main attractions of MCAs is their independence from stock market dips. Even if the stock market dives, MCAs can remain largely unaffected, acting as a stabilizing force in an investor’s portfolio.
  • High Potential Returns: When benchmarked against traditional fixed-income sources like bonds, MCAs often present superior return profiles. Check out our Q2 results to see for yourself.

Integrating MCAs into Your Portfolio: A Step-by-Step Guide

Step 1: Understand the MCA Model

Before diving in, familiarize yourself with the fundamentals of the MCA model. Recognize its distinctiveness from traditional loans and appreciate its alignment with today’s business dynamics. Here is a detailed guide to exactly how they work.

Step 2: Portfolio Analysis

Examine your current portfolio. Identify areas that lack diversification or are vulnerable to market volatility. This will spotlight where MCAs can provide the most value.

Step 3: Decide on MCA Allocation

How much of your portfolio do you want in MCAs? While the answer varies for each investor, a common strategy is to allocate a portion that complements riskier assets, ensuring a balance between stability and growth potential.

Step 4: Choose a Reliable Platform

For streamlined MCA investments, partner with reputable platforms. At Supervest, for example, we offer a transparent, user-friendly interface ensuring investors fully understand the nuances of their investments.

Step 5: Continuous Monitoring and Rebalancing

The investment world is fluid. Regularly review your MCA investments in tandem with other assets. Rebalance as necessary to maintain your chosen risk-reward profile.

Ready to get started? Connect with us today or request a platform walkthrough to explore how MCAs can be the game-changer in your investment journey.

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