What Does Investment Diversification Mean to You?
By Gisele Melo
To date, I’ve facilitated buy/sell transactions totaling $5 billion in assets under management. If there’s one thing I’ve witnessed as an entrepreneur that found her way into investment banking by doing deals, it’s that there’s a new play for diversifying today’s portfolio mix.
In my time as Partner, Head of Investment Banking with Toren & Associates, I’ve personally met with over 300 wealth management firms and 2,000 standalone wealth managers that help HNW (high net worth) and UHNW (ultra-high net worth) families, as well as institutions, make what are often difficult decisions about their wealth and well-being. As a growth advisor to these firms and managers, I’ve learned that HNW investors have an increased appetite to add alternative investments to their portfolio mix — especially when those investments also express their personal values.
Diversification in Life; Diversification in Assets
Diverse teams are smarter. It seems reasonable to suggest that being a smart investor is a worthy pursuit. For this reason, investors are drilled into seeking diversification as part of a financial calculation. As an investor, if you want to plan for investments and uncover opportunities that maintain and manage your wealth over the course of your life, diversification is absolutely part of your plan.
Now that we know that diverse teams are smarter, the door is open to considering that diverse investments with diverse teams may be better as well. And alas, we can see there is data emerging in support of this compounding hypothesis.
Exploring alternative investment classes that align with personal values surrounding diversity can deliver double impact.
A holistic approach to diversity in investment planning makes sense.
If you want your wealth manager to provide you with a holistic approach to managing your money and investments within the context of your personal values as well as your life stage, this topic is a reasonable conversation.
As you plan for after-tax wealth preservation, performance and inter-generational wealth transfer, you look beyond investment management and asset allocation for a more diverse approach, and we can mean that in the most robust definition you can imagine.
It is fair to consider that the rise of this broader vision for investment planning is partly a result of a wider consideration of what it means to be an investor. The global pandemic, Black Lives Matter, global social unrest, and natural and environmental concerns are coupled to deep-seeded human realities which are opening our eyes and for some the new vision is inspiring.
To look beyond the short-term means reflecting on values, thinking of future generations, children and grandchildren, and wanting to better connect and to have a deeper impact on the world.
It turns out that selection of alternative class, or shall we say “diverse”, investments do just that. They aim for higher returns that lead to a more balanced portfolio, contribute to a long-term legacy for you and your family and better align with values that appreciate a more observant understanding of what it means to be an investor.
Exploring Alternative Investment Opportunities
Since 2008, traditional asset classes such as stocks, bonds and the cash market have had a shaky relationship with investors due to diminished trust in their stability. Investors are seeking diversification from low-interest bonds and high-valued equities, along with downside protection amid volatility and non-correlated returns.
Because of the increased ease of access to information, online platforms, apps, and private market funds, there is more opportunity to explore alternative classes, such as venture capital, real estate and private equity.
HNW investors are not alone in seeking these alternatives. According to the Alternative Investment Management Association (AIMA), alternative allocations in 2021 show increased importance in both institutional and retail portfolios.
According to Preqin Insights, venture capital deal values have skyrocketed in Q1 of 2021. As Prequin noted, ”aggregate deal value reached $126bn for the quarter, smashing previous quarterly records. The sector has proved adaptable — and perhaps more willing and able than other asset classes — when it comes to closing deals remotely.”
Alternative asset classes provide for a more diversified, better-balanced portfolio. But today’s diversification is not only geared towards more stability and higher returns, it’s also about more meaningful investments.
For Us, Diversification is in our DNA
At MATR Ventures, we are intentionally focusing on venture capital in a different way. We are excited to provide private and institutional investors with the opportunity to exceed traditional asset classes by combining high potential returns and meaningful investment.
MATR Ventures is unique in its ability to offer:
1) Access to undervalued opportunities, because the venture capital market is underinvested in the space in which we specialize.
2) Access to private tech opportunities that are not correlated to the public markets.
3) Opportunity to make a positive societal impact for generations to come.
Being Underestimated is a Superpower
Matr Ventures invests in Underestimated Founders (Black, Indigenous, LatinX, Persons of Colour, Women, 2SLGBTQ & Persons with disabilities).
Underestimated Founders represent a burgeoning share of the entrepreneurial landscape. Yet data shows that less than 1% of venture capital funding goes to Black Founders, 2% to LatinX, and 10% to women, disproportionately low numbers.
By all measures, including ROI and revenue, women-led companies and diverse teams outperform the broader market by 2.3x.
The Underestimated Founder’s time has come. They are a force — and we are here to power them.
Join us and add above-market returns and more meaning to the way you diversify your portfolio.
Giselle
Founder + General Partner
Matr Ventures
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