PENSCO CEO Kelly Rodrigues
PENSCO CEO Kelly Rodrigues

Study shows self-directed IRA investors warming to non-traded alternative assets

A new survey from PENSCO Trust Company finds self-directed IRA investors are warming to non-traded alternative assets.

The survey of close to 1,000 PENSCO clients found the main reason is the need for diversification due to market volatility.

More than 60 percent (62) of respondents said they either plan to or have already increased their allocation of non-traded alternatives as they respond to current volatility. One in four say they plan to increase that allocation within five years.

PENSCO CEO Kelly Rodrigues
PENSCO CEO Kelly Rodriques

PENSCO CEO Kelly Rodriques said improved investor knowledge and fewer hurdles have made non-traded alternatives a more appealing option.

“Our survey found that compared to last year, investors now experience fewer hurdles to investing in non-traded alternatives, and they possess a better understanding of how to use an IRA to invest in various alternative asset classes. As the market continues showing signs of volatility and as individuals increasingly understand the potential benefits of adding alternative assets to their portfolios, we anticipate that self-directed IRA investors will continue pursuing non-traded alternatives that have different risk and return profiles from traditional stocks and bonds.”

Another popular reason for investor interest is the opportunity to invest in sectors of which the investor has some knowledge.

Real estate is the most popular asset class for investors at 52 percent. An additional 25 percent are opting for private equity.

The U.S. Securities and Exchange Commission’s Title III passing allows investors online access to private portals. Mr. Rodriques expects capital raisers to look to self-directed IRA investors.

“Starting next year, the general public will be able to buy shares of private companies that are issued on securities crowdfunding platforms, which means that the need for investor education on the topic is greater than ever before. We expect capital raisers to tap self-directed IRA investors for funding through crowdfunding vehicles.”

“We also anticipate increased interest from individuals looking to use retirement funds to invest in equity crowdfunding opportunities, leading to the overall growth of the self-directed IRA market.”

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