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Optimal Portfolio Diversification for Family Offices

November 3, 2023

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Family Offices and their portfolios can potentially be enhanced through an investment arsenal with unique, vetted opportunities in Merchant Cash Advances (MCAs), a less well-known path to diversified portfolios that are rapidly increasing in popularity.

Data from Sobanco indicates that the merchant cash advance industry has experienced substantial growth, expanding from $8 billion in 2016 to $19 billion by 2021. Further research from Adriot suggests that the worldwide MCA market will exceed $29.3 billion by 2029.

Although estimates differ regarding the exact size of the MCA industry in 2023, it’s evident that the sector is undergoing rapid expansion thanks to MCAs’ ability to provide potentially attractive returns whilst hedging against market shocks and increasing the diversification of a portfolio.

Understanding Merchant Cash Advances as an Investment Vehicle

Merchant Cash Advances present an attractive avenue for safe investment diversification because, unlike traditional loans, MCAs offer businesses a lump sum in exchange for a percentage of future credit card sales. This unique mechanism ensures a more fluid repayment structure, adapting to a business’s cash flow, which in turn can reduce the risk of defaults.

Integrating MCAs into a diversified portfolio can provide the advantages of an alternative asset class, balancing potential risks and rewards differently from stock or bond investments, making them an essential component of comprehensive investment diversification.

One hand passing a pen to another for ‘Safe and Diversified: Optimal Portfolio Diversification for Family Offices’
Diversification is key to protecting capital. Photo by Andrea offices

Supervest’s Unique Approach to Diversification

When you invest in our 10% 12-month note or our 12% 24-month note, you are investing in a rich spread of MCA deals. These deals are spread across industry, geographical regions, and individual businesses. We think of this as diversification within diversification, compounding the risk-reward spread effect of choosing an alternative asset in the first place.

Further enhancing our risk management strategy is the 5% exposure cap per MCA deal, which means that investors limit their investment in any single deal to a maximum of 5% of their total portfolio of MCAs.

This safeguard not only promotes diversification but also minimizes risk, making it an ideal choice for conscientious family office investors seeking varied and secure investment opportunities.

A door with very secure locks for ‘Safe and Diversified: Optimal Portfolio Diversification for Family Offices’
We secure only the highest quality MCA deals for maximum security. Photo by Pixabay

Safety First for Family Offices: Risk Management on the Supervest Platform

Supervest prioritizes investor safety through rigorous risk management practices. Our due diligence process is meticulous, selecting only those Merchant Cash Advance deals that meet stringent criteria.

This careful selection, coupled with ongoing monitoring of investments, ensures a higher standard of deal quality. Our proactive safety measures, including thorough assessment and continuous oversight, mean a more secure investment environment.

The Role of Supervest in Enhancing Portfolio Diversification for Family Offices

Taken together, MCAs can be seen to offer an attractive alternative asset diversification tool, giving you another way to balance risk and reward in pursuit of your long-term growth and legacy goals.

The proven performance of our notes is a testament to our diligence and expertise in this niche alternative asset area – we achieved 100% success with our MCA notes. Since their launch, both our 10% and our 12% notes have consistently met all scheduled interest payments promptly and in full.

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