Big Risk, Out of Reach
That being said, there are investors who are interested in supporting venture capital in Canada, according to Birenbaum and they, generally speaking, have a great deal of personal wealth and participating in some of these opportunities, which are suitable for a very small percentage of Canadian investors, makes sense for them.
“In my view, it is a very small market and I think an investor has to have a fairly high appetite for risk and a fairly large portfolio to make it a sensible thing to do,” she says.
Real estate-related exempt market opportunities are what she sees attracting some investors.
“Investors looking for yields that are higher than GICs, are seeing exempt products that have fixed-income characteristics where they pay a monthly distribution well above GIC rates, so they are attracted to those products and enquiring about them.”
Sticking with what you know
What it comes down to for Birenbaum is that it is her job as a financial advisor to ensure her clients are fully informed of the associated risks of investment products, including exempt market products, which to some clients look attractive.
“The reality is that is if an investment is paying four times the GIC yield, there has got to be a whole lot more risk associated with that investment and that is something investors, at least when they are inquiring, don’t necessarily appreciate until we get into the nitty-gritty of product.”
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