The Private Shares Fund

Verdict

• ALIGNMENT: Low

  • Management has limited personal investment in the fund, weakening alignment with everyday investors who face high fees and liquidity restrictions.
  • No performance fees mean managers earn the same regardless of results, though this eliminates some conflicts of interest.

• Performance: Below Average

  • The 7.92% annual return since inception is respectable but disappointing given the illiquidity, high fees, and concentration risk of private investments
  • So far this year, it’s actually down 1.61%, reminding us this isn’t a smooth ride. And don’t count on income: the fund doesn’t pay out dividends. It’s a long-game, growth-only strategy, and returns can be hit or miss along the way.

• Market Risk: High

  • Heavy concentration in technology and late-stage venture companies creates significant sector and stage-specific risk during market downturns.
  • Private company valuations can be volatile and subject to sudden markdowns during challenging market conditions or IPO market closures.

• Business Risk: High

  • The fund’s interval structure provides some protection from daily redemption pressure, allowing for longer-term private investment strategies.
  • However, dependence on successful IPOs and private market liquidity creates meaningful business model risk during challenging market periods.

• Debt Risk: Average

  • The fund uses minimal leverage, reducing debt-related risks, though underlying portfolio companies may carry significant debt loads.
  • Private company capital structures can be complex with multiple classes of preferred shares, potentially limiting upside participation.

• Liquidity Risk: High

  • Quarterly redemption offers limited to 5% of outstanding shares create severe liquidity constraints that could trap investor capital.
  • No secondary market exists for shares, and redemptions can be suspended entirely during market stress when liquidity is most needed.

• Transparency: Low

  • Fund provides regular NAV updates and detailed portfolio allocation information, though private company valuations rely on appraisals rather than market prices.
  • Most of what the fund owns are private companies—so there’s no regular reporting, and it’s hard to know what those investments are really worth. You won’t find real-time updates or much access to the team behind the fund. While some info is on their website, it’s not easy to digest for everyday investors. You’re largely trusting the managers and flying a bit blind.

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  All Rights Reserved. The data and analyses contained herein are the property of Noyack and are protected by copyright and other intellectual property laws. The information provided is intended solely for informational purposes and should not be construed as investment advice. It is not an offer to buy or sell a security, and it is not intended to be used as the sole basis for any investment decision. The information contained in this document is believed to be accurate and reliable based on sources believed to be reliable, but Noyack makes no representation or warranty, express or implied, as to its completeness, accuracy, or timeliness. The data and analyses are subject to change without notice and Noyack is not obligated to update this information. The use of the information contained in this document is at the sole risk of the reader, and Noyack shall not be responsible for any losses, damages, or expenses incurred by any person as a result of reliance on the information contained herein. Noyack does not endorse or approve any investment or trading strategy and does not guarantee any specific outcome or profit. The reader should always conduct their own independent analysis and consult with a qualified financial advisor before making any investment decisions. This document may contain forward-looking statements and projections which are subject to risks and uncertainties, and actual results may differ materially. Past performance is not indicative of future results. This document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Noyack reserves the right to modify or discontinue the provision of the information contained in this document, in whole or in part, at any time and without notice. The information contained in this document is provided “as is” and Noyack makes no representation or warranty of any kind, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of the information contained in this document. Noyack shall not be liable for any errors or omissions contained in this document or for any damages whatsoever arising out of or in connection with the use of this document.