Crowdfunding in the Context of Portfolio Management

iAngels’ Founding Partner, Shelly Hod Moyal, recently published a white paper that explains how crowdfunding fits into the context of portfolio management.  Below is the introduction of the piece.  You can download the full version here
 
With interest rates at zero and the introduction of crowdfunding-based financial innovations, investors are seeking both alpha and diversification in a new class of alternative assets: start-ups, consumer loans, private equities, and real estate projects.
While investors have deployed capital into venture capital and private equity funds, credit funds, and REITs for quite some time, “alternative alternatives” or “A2 “, represent the possibility of investing in specific securities within each of these alternative asset classes. Just like the public invests in and lends to public companies through individual stocks and bonds — not just mutual funds, the investing public can now invest in and lend to private companies and individuals through crowdfunding.
Yet, although start-up investments have a low correlation with traditional assets and can complement an investment portfolio, start-up investing is not suitable for all investors. Due to their small size, start-up investments are both illiquid and highly volatile. (For more on whether start-up investing is right for you click here).

This white paper discusses the risk/return profile of A2 with respect to diversification, a changing investment landscape, strategic asset allocation, and the prospects of A2 investing – specifically start-ups– as part of a broader investment strategy.