Pensco Believes Title III Retail Crowdfunding May Benefit from IRA Money

Kelly Rodriques and Eileen LoustauPensco Trust Company has always been at the forefront of embracing alternative asset classes for its customers. In a low-interest rate environment the hunt for yield is intense and new asset classes have been able to deliver better returns.  Pensco believes that Title III of the JOBS Act, that allow for retail equity crowdfunding, may benefit from money held in IRA accounts.

In a study of approximately 1000 IRA investors, almost two-thirds (62%) indicated they were increasing allocations in new asset classes or intend to do so in the future. Twenty-five percent (25%) intend to do so in the next 5 years.  Top asset classes? Real estate and private equity.

“Real estate is popular among self-directed IRA clients because of its potential for income generation and hedging against inflation, while private equity offers investors with long investment horizons the potential for growth,” said Kelly Rodriques, CEO of Pensco.

As one would expect, justification for investment alternatives included;

  • 27% of respondents, is to improve diversification and risk-return characteristics.
  • 26% of participants, is the opportunity to invest in businesses, sectors, and industries about which they have personal knowledge or expertise.
  • 16% think the most significant benefit is the potential to generate income for their retirement portfolio.

PENSCO MarketplacePensco breaks down asset class interest further;

  • 52% say they are likely to increase their retirement portfolio allocation to real estate (ranging from single family investment property to non-traded REITs)
  • 25% are likely to increase their allocation to private equity (such as investment in a startup or a fund).
  • 35% of new accounts at Pensco in the first three-quarters of this year have invested in private equity, while 32% bought real estate.

This is the second year Pensco has conducted the survey and it is clear they are following consumer demand that desires access beyond standard investment fare. While Title III retail crowdfunding will not become actionable until mid 2016, it may provide another alternative for IRA holders. Pensco has already partnered with a growing list of investment crowdfunding platforms to provide sufficient volume for investors.

“Our survey found that compared to last year, investors now experience fewer hurdles to investing in non-traded alternatives, and they possess a better understanding of how to use an IRA to invest in various alternative asset classes,” said Rodriques. “As the market continues showing signs of volatility and as individuals increasingly understand the potential benefits of adding alternative assets to their portfolios, we anticipate that self-directed IRA investors will continue pursuing non-traded alternatives that have different risk and return profiles from traditional stocks and bonds.”





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