NTARE FINANCIAL

Retirement savings is a top priority for many savers. Saving now for retirement will ensure that you have enough money to enjoy a comfortable standard of living when you stop or reduce the amount of hours you work. You may be able to save for retirement at your workplace through a 401k plan.

Alternative investments are those that are not part of traditional investments such as publicly-traded stocks, bonds paying a fixed interest rate over a specific period of time, cash-equivalents such as a CD that can easily be converted into cash, or cash itself.

Do we still trust the stock market?

Stock markets are meant to provide the public with access to efficient and fair financial markets. There are some structural issues that tilt trading profits in favor of larger institutional investors, at the expense of less-skilled, less-resourced retail traders and several scandals in the last twenty years have also shaken the faith of ordinary investors. Despite this, stock markets remains a trustworthy place to invest, especially if you utilize reliable, well-founded strategies such as indexing.

Information Asymmetry

Despite the seemingly endless financial and stock data found online, as an individual investor, you do not have access to in-house technical experts or research analysts. Most investors also do not have sophisticated automated trading systems to provide trading suggestions. Nor are most average investors skilled in technical analysis.

Asymmetric information, also known as "information failure," occurs in a market when one party to a transaction has greater material knowledge than the other party. In markets, insider information can be used to one's advantage, although insider trading is illegal and unethical. Still, professional traders and institutional investors often have an information advantage.

We are a fiduciary agency.

The Investment Advisers Act of 1940 (“Advisers Act”) lays out the two basic fiduciary duties that all investment advisers owe to their clients: the duty of care and the duty of loyalty. An adviser must always serve the best interests of its client and cannot put its own interests ahead of the interests of its client.

Ntare Financial and its agents are paid by their clients and always disclose business relationships between all clients.

Ntare Financial is an alternative investment firm that manages assets that do not fall into the conventional investment categories including but not limited to stocks, bonds and other related products.

Our investments include private equity, real estate and derivatives contracts.

Solving entrepreneurs and small business investment challenges

Alternative investments are assets that do not fall under the traditional investments in the stock market. Our work includes managing assets such as private equity accounts, real estate portfolios, private investment clubs, infrastructure and impact focused investment. Compared to popular investment in listed securities, alternative investments are usually mischaracterized as having less liquidity and being complex to create.

Just like any investment, any portfolio needs to be well structured; speak to a NTARE advisor about how alternative investments can be modeled to have access to your money when it is needed. It has not a popular way to invest but Alternative investments are becoming increasingly attractive because they may offer a different return profile to an institutional portfolio. They tend to have a low correlation to stock and bond markets so they’re often useful in portfolios to add diversification or provide a hedge against market downturns. As expectations for returns in the coming years in public equities and fixed income continue to dampen, our belief is that savvy investors are looking elsewhere for ways to achieve their investment and retirement goals.

Why alternative investments?

NTARE Alternative investments low fees and affordable minimum investments, compared to retail-oriented mutual funds and ETFs. We also tend to have lower transaction costs, and since this is a relatively new way to invest for the long run, it can be harder to get verifiable financial data for these assets. This is why our funds have more liquidity considerations and transparency measures to aid in the growth and accessibility of this investment strategy.

Fees

Our fee structure lets our clients know what to expect when working with us. Potential customers can also examine our company's fee structure to make sure you find it satisfactory before deciding to do business with us.

Our structure provides a base level of fees for the management of the fund, plus an additional "incentive" fee that aligns the manager and investor interest. Our managers have a management fee of 1% of all the funds managed ; we have a 10% incentive above a 10% net return, and a 20% high watermark fee.

Investment Management Fee

The management fee is the monthly cost of having your assets professionally managed. This fee compensates NTARE professionals to select investments for a fund’s portfolio and manage it based on the fund’s investment objective. Management fee structures vary from fund to fund, but generally based on a percentage of assets under management (AUM) of 1% or a $25 month fee.

HURDLE RATE

Our hurdle rate is the minimum rate of return on a project or investment required by the fund in order to receive a payment. It allows us to make important decisions on whether or not to pursue a specific project. 10% of the profit is the appropriate compensation for project’s associated risk, cost of capital and the returns of other possible investments or projects.

HIGH WATERMARK

This is the highest peak in value that the fund account has reached and if the fund must be above the high-water mark before receiving a performance bonus from the assets under management (AUM) within a given period. The 20% high-water mark both protects the fund's investors from double fees during the year and motivates the firm to perform well.

Real Estate as an Alternative Investment

Our funds seek to provide individuals, small businesses and investors access to income-producing, investment grade quality real estate.

Why invest in private real estate?

Diversification

Private real estate historically diversifies both bond and stock portfolios.

Income

Private real estate has a track record of delivering higher yields than fixed income and strong performance during periods of inflation.1

Growth potential

Over the long run, private real estate has appreciated more than the rate of inflation.

The primary investment strategy is to acquire stabilized, income-generating real properties. The strategy also allows for equity investments in real estate opportunities that incorporate property refurbishment, redevelopment, and development; as well as investment in real estate debt and real estate-related securities.

Real estate - including private equity and private debt - is arguably one of the least risky types of alternative investments, depending on the asset class invested in.

Single-family rentals, multifamily properties, and alternative asset classes such as self-storage can generate higher yields and stable incomes within a diversified investment portfolio, while historically providing downturn protection.

The advantage of niche investing in an alternative asset like assisted living facilities is that it is under the radar screen of the general investing public compared to residential rental property. A niche asset such as group homes can mean less competition from other investors, along with oversized returns.

The reason that real estate is a good alternative investment in general is that it checks all of the boxes that passive income investors are looking for:

Income

Real estate investments generate recurring cash flow from rents received from tenants and dividend distributions in private equity investments.

In fact, high-quality investment real estate is often described as having "bond-like" characteristics, only better. According to J.P.Morgan Asset Management, core real estate has high quality, relatively transparent income streams that are well above core government bond yields.

Appreciation

Growth in rental rates and asset value is another reason why real estate makes a good alternative investment. In a commercial real estate investment like self-storage, leases are normally on a month-to-month basis.

This means that rents can be adjusted to match the rate of inflation and the demand for storage space in a specific market, unlike residential rental property that typically has 12-month lease agreement or other types of commercial real estate where leases of five to ten years are the norm.

Although most tenants rent self-storage space by the month, the storage unit rental duration is quite long. The average rental duration of a storage unit is about 14 months, with 42% of tenants renting for between one and ten years.

Not only does real estate have a high risk-adjusted return compared to stock and bonds, commercial real estate also acts as an inflation hedge. The Real Estate Research Institute (RERI) recently published The Role of Commercial Real Estate in a Multi-Asset Portfolio.

The report observes that commercial real estate has a positive correlation with both anticipated and unanticipated inflation, and consequently acts as a hedge against inflation. In other words, real estate values generally increase faster than the rate of inflation.

Stability

Adding an alternative investment like real estate can also create a more stable, balanced portfolio for the passive income investor.

Bond-like yields from recurring rental income, asset value growth over the long term, and the inflation hedge characteristics of commercial real estate can provide stability and act as a safe haven to investors through all phases of the economic cycle.

As RERI's report suggests, direct investment in real estate outperforms stocks and bonds on a risk-adjusted basis for a long period of time. By including the performance of real estate in a portfolio optimization model, studies show that about 10% to 20% of a portfolio should be allocated to real estate.

Pricing

Something that almost all alternative assets have in common is that represent direct ownership of the investment. Investments such as fine wine, gold coins, or rare works of art are all assets that can be seen, touched, and felt. The same is not true for a share of stock. A quick look at the "Proving Securities Ownership" page on the U.S. Securities and Exchange Commission website explains how opaque stock ownership really is.

Real estate is another example of an alternative asset that is directly owned. For example, an investor who owns real estate directly or through a private equity real estate deal has direct ownership of the real property or the joint venture LLC that owns the property. The same is true of private debt, such as a mortgage note. In exchange for lending a developer money, the investor receives a lien on the property (in addition to regular interest payments). If the project does not work out as expected, both debt and equity real estate investors have the real property as collateral.

On the other hand, shareholders of a publicly traded firm that files for bankruptcy are left with nothing but a loss.

LESS VOLATILITY means more PEACE OF MIND

Volatility in investing occurs when the price of an asset or the cash flow generated fluctuates significantly from one period to the next. With a publicly traded asset like a stock, prices can be highly volatile, going up or down based on the whim of the market and the investing community. Real estate that is privately held for the passive income the property generates can be much less volatile, with lower volatility leading to higher returns.

What Is NTARE Private Equity?

The NTARE Private equity funds are investment partnerships that start and build or buy and manage businesses before selling them. NTARE Financial operates these investment funds on behalf of institutional, accredited investors, cultural groups and investment clubs.

Our private equity business has grown rapidly amid increased allocations to alternative investments and following private equity funds' relatively strong returns since 2000. In 2021, our private equity buyouts hit a record, doubling from 2020. As the markets continue to project lower returns in the coming years, we have seen increased interest in private equity investing.

NTARE Financial raises client capital to launch private equity funds, and operates them as the general partner, managing fund investments in exchange for fees and a share of profits above a preset minimum (hurdle rate). We have funds that have finite terms of 2, 5 and 10 years; the money invested isn't available for subsequent withdrawals. Our oldest funds started in 2017 are set to start distributing profits to their investors after five years of investing. The average holding period for our private equity portfolios is five years in 2022.

How Are NTARE Private Equity Funds Managed?

Our private equity funds are managed by our General Partners. We implement all of the fund's management decisions and also contribute up to 3% of the fund's capital to ensure we have skin in the game. Our business earns management fees at 1.5% of fund assets, and entitled to up to 12.5% of fund profits above a preset hurdle rate as incentive compensation. Our clients are limited partners that invest in its fund; they have limited liability and find it a great way to make passive income and invest for the future.

In February 2022, the SEC proposed extensive new reporting and client disclosure requirements for private fund advisers including private equity fund managers that we have been following since our inception in 2017. We require our advisers to provide clients with quarterly statements detailing fund performance, fees, and expenses, and to obtain annual fund audits. Our fund advisors are barred from providing preferential terms for one client in an investment vehicle without disclosing this to the other investors in the same fund.

NTARE Financial is an independent investment firm that is not registered but adheres to the Securities and Exchange Commission (SEC) rules, operates under the Investment Company Act of 1940 and the Securities Act of 1933, all our partners, agents and employees remain subject to the Investment Advisers Act of 1940 as well as the anti-fraud provisions of federal securities laws. All regulated services are performed by licensed affiliates, agents and partners under separate terms of agreement.