11-20-2024
For years, alternative investment opportunities such as private equity were off-limits to individuals. It typically took a minimum of $10 million to participate, and only very large institutional investors had access to participate in private assets, which can offer higher returns and better diversification than public markets.
With a relaxation in regulations, that’s changed over the past 5-7 years, and David Fox believes it’s a positive step. Fox, who earned a bachelor’s degree and MBA from the Daniels School, is former senior managing director at Blackstone Strategic Partners. Earlier this year, he became partner and co-head of the Sage fund at Leonard Green & Partners, and he returned to Purdue's campus November 15 to speak to students in the business school's Executive Forum.
“I think democratizing access to avenues like private equity is a good thing,” he said. “It will bring down the cost of capital and give individuals more personal choice. Companies can design products that will allow people with $250,000 to participate rather than the millions that were previously required.
“In my case, I have about 25 years before I might retire. I don’t want my assets to be tied up in the S&P and mutual funds. I’d rather have choices that provide steady returns with lower risk.”
There is a caveat.
“I don’t believe in investing in something you don’t understand, so it’s important that consumers educate themselves. Products should be transparent without excess fees, and the companies that build those types of offerings will be the most successful. The competition will also lower costs for consumers to enter,” he said.
Fox’s new role at Leonard Green is to build the company’s secondaries strategy, where investors buy and sell securities, with trades taking place on the secondary market between other investors and traders rather than from the companies that issue the securities. Fox was named to the Private Equity International “PEI’s 40 under 40: Future Leaders of Private Equity” list in 2020.
