Private Equity, Real Estate and Global Infrastructure
Private Equity  
The investment activities of private equity firms encompass every aspect of the lifecycle of an organization, ranging from start-ups to mature businesses. There are three general types of private equity: venture capital, mezzanine, and leveraged buyouts (LBOs). The goal of private equity investing is to generate substantially greater returns than the long-term historical equity markets, enhancing overall portfolio performance. Achieving such performance comes at a price: higher levels of risk and very limited to no liquidity. Most private equity pools require long investment horizons (at least five to seven years) and do not provide positive cash flow in the early years of the investment. Within this broad spectrum of private equity, there is a great deal of specialization among firms, as well as extreme disparity among Private Equity managers’ performance. As a result, we work with clients to build a diversified portfolio with different managers and diverse strategies suited to their needs.
As investors build programs to harness some of the benefits of private equity investing, QMS Advisors strives to educate decision makers about the appropriate uses and potential risks of the asset class. In addition to general education, QMS Advisors works with clients to devise plan structures that diversify their programs by style, vintage year, and manager, utilizing both funds-of-funds and direct partnership investments.
  • Selection criteria across Private Equity funds
    • Incremental diversification may be attained by capitalizing on low correlations across funds.
      • Different investment focuses, objectives, sectors, stages and managers.
      • Different locations: geographical diversification by investing across regions.
      • Different vintage years: laddered investments can minimize market timing effect by investing across economic cycles.
    • Manager Selection Criteria: Marked heterogeneity among funds and high consistency in performance for top quartile managers advocate for an in-depth due diligence process.
  • Sector cyclicality
    • Private Equity funds’ returns are highly cyclical
    • Aggregate industry returns are subdued following an economic expansion
    • Established funds are less affected by industry cycles, cyclical detraction from performance is dependant on new entrants

Upon this foundation of education and plan design, QMS Advisors works with clients to mitigate the J-Curve effect associated with ramping up a fund’s allocation into the asset class.

Real Estate and Global Infrastructure

QMS Advisors’ approach to designing a successful real estate program for our clients is driven by each investor's particular needs and investment objectives. By fully understanding a client's return requirements, liquidity needs, risk tolerances and any statutory or other constraints; we are able to develop an informed and customized real estate strategy. QMS Advisors covers equity and debt vehicles in both the private and public markets. We believe that a well-designed real estate program can enhance risk-adjusted returns, decrease volatility, improve diversification, and generate additional cash flows. Additionally, Global Infrastructure and some Real Estate investments may provide long duration exposure; therefore helping plans offset some of their interest rate risk exposure.