Chained Assets - Research
ChainedAssets.comDoDAO.io
  • Intro to RWA
    • About This Module
    • RWA Introduction
      • Tokenization Process
      • Why RWAs: Bridging the Financial Gap
      • Why RWAs: State of Crypto and Imp. of RWAs in Crypto
      • Role of Regulations in Real-World Assets (RWAs)
      • Unique advantages for RWA developers
    • Regulations and Startups
      • Balance Between Innovation and Oversight in Emerging Industries
      • Impact of Restrictive Regulations on Blockchain
      • Good vs Bad Players
      • Investor Protection
    • US - Market & Regulations
      • Regulations in US
      • Exemptions in US
      • Table of Regulations
      • Conclusion
      • Other Important Regulations
  • Important Questions for Builders
  • RWA - Focus Areas
    • About This Module
    • Alternative Investments
      • Growth of Alternative Investments Market
      • Types of Alternative Investments
      • Pros & Cons
      • Due Diligence Process
    • Alt Asset 1 - Private Debt/Credit
      • Returns on Private Credit
      • Market Share & Growth of Private Credit
      • Types of Private Credit
      • Private Credit History
      • Important Terms
      • Working of Private Credit
      • Private Credit and Life Sciences
      • Important Metrics and Information points
      • Distressed Debt
      • Challenges faced by Industry
      • Use Cases for New Technology
      • Solutions/Ideas
    • Alt Asset 2 - Private Real Estate
      • Growth of Private Real Estate
      • Real Estate Fund Structures
        • Real Estate Syndication
        • Private Real Estate Fund
          • Fund Types
          • Creating a Funding
          • Closed vs Open ended Fund
          • Sponsor Compensation
        • Private RIETs
          • Setup Prive REIT
          • Important Terms
      • Comparison of Types
      • Important Terms
      • Important Metrics for Private Real Estate Funds
    • Alt Asset 3 - Private Equity
      • Growth in Private Equity Market
      • Types of Private Equity
      • Secondary Markets
        • Statistics- Secondary Markets
        • Top Secondary Market Players
    • Global & Innovative Distribution of Assets
      • Distribution of Assets
      • Consumer Stocks
      • Shareholder Perks
  • Legal
    • Asset Securitization
      • Structure: Traditional Securitization
      • RWA Project Examples with Partners
      • What is a SPV?
      • Role of SPVs in Securitization
      • Benefits of Asset Securitization
      • Structures of Asset-Backed Securities
      • Parties Involved In Securitization Process
      • Structuring the Transaction
    • Cayman Island - Orphan SPVs
      • Core Elements of an Orphan SPV Framework
      • How are Orphan SPVs formed?
      • Management of the Orphan SPV
    • Trusts
      • Key Components of a Trust
      • Trustee
      • Benefits to Investors/Shareholders
      • Examples of Trusts used by Web3 Funds
      • Unit Investment Trusts (UITs)
      • Delaware Statutory Trusts (DSTs)
      • FAQs
    • Global Regulatory Landscape
      • Switzerland
      • Luxembourg
      • Hong Kong
      • United Kingdom
      • Liechtenstein
      • Bermuda
      • British Virgin Islands
      • Cayman Islands
      • Jersey
      • MiCAR
  • MORE
    • Rubrics
      • Rubrics For Top Asset Types
      • SPVs Evaluation Rubric
      • Asset Originator Evaluation Rubric
      • Trusts Evaluation Rubric
      • FAQs
    • References
      • Regulations
      • Introduction
      • Alternative Investment
      • Trusts
      • Custodian
      • Securitization
      • REITs
      • Private Equity
      • Private Real Estate
      • Private Debt
      • Crypto Projects
      • Detailed Reports
      • DeFi Integrations
      • Global Distribution
      • Global Regulations
      • Private Credit - Borrowers
      • People
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  1. RWA - Focus Areas
  2. Alternative Investments

Pros & Cons

Private Equity

Pros:

  • High Potential Returns: Private equity investments can offer significant returns, especially if the company grows or improves in value over time.

  • Active Involvement: Investors often have a say in how the company is run, which can help boost its performance and increase returns.

  • Diverse Investment Opportunities: Private equity covers various sectors and strategies, like buying established companies (Growth Equity) or real estate (Real Estate Private Equity).

Cons:

  • Illiquidity: It can be difficult to sell your shares quickly because private companies aren’t traded on the stock market.

  • High Risk: If the company doesn’t perform well, you could lose your investment, especially in riskier strategies like Leveraged Buyouts (LBOs).

  • Long Investment Horizon: You often need to wait several years to see any returns, as these investments are usually long-term.

Private Debt

Pros:

  • Regular Income: Private debt investments often provide regular interest payments, which can be a steady source of income.

  • Diversification: Investing in private debt allows you to spread your risk by lending to different types of companies or industries.

  • Lower Volatility: Private debt is generally less affected by market swings compared to stocks, providing more stability.

Cons:

  • Credit Risk: If the company you lend to struggles financially, they may default on the loan, meaning you might not get your money back.

  • Less Liquidity: Like private equity, it can be harder to sell private debt quickly since it’s not traded on public markets.

  • Complexity: Private debt deals can be complex, requiring careful analysis and understanding of the borrower’s risk.

Real Assets

Pros:

  • Stability: Real assets like real estate, infrastructure, and natural resources tend to be more stable and less volatile than stocks and bonds.

  • Inflation Protection: Real assets often increase in value during inflation, helping to protect your investment.

  • Income Generation: Many real assets, like real estate, can generate regular income through rent or other revenue streams.

Cons:

  • Illiquidity: Real assets can be difficult to sell quickly, especially during economic downturns.

  • High Initial Costs: Investing in real assets often requires a large upfront investment, such as buying property or infrastructure.

  • Management Requirements: Real assets like real estate need ongoing management and maintenance, which can be time-consuming and costly.

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Last updated 8 months ago