PENSCO Study Finds That Market Volatility and Diversification Potential Will Drive Interest in Non-Traded Alternatives Like Real Estate and Private Equity among Retirement Investors

Beginning 2016, new rules under Title III of the JOBS Act could pave
the way for more crowdfunding opportunities involving IRA dollars

SAN FRANCISCO–(BUSINESS WIRE)–In response to market volatility, retirement investors are seeking to
increase diversification in their portfolios by buying more non-traded
alternative assets, according to a study by PENSCO, the leading
alternative asset custodian for self-directed IRA investors which this
year celebrates its 25th anniversary.

This is the second year that PENSCO has surveyed investors on their
attitudes and behaviors related to non-traded alternative assets for
retirement accounts. Almost 1,000 clients responded, and close to two
thirds (62%) say they have already increased their allocation to
non-traded alternatives or plan to as a result of the market volatility.
Meanwhile, a quarter (25%) say they intend to increase their allocation
to non-traded alternatives in the next five years.

“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,” said Kelly Rodriques, chief executive
officer of PENSCO. “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.”

The most popular reason for seeking out non-traded alternatives for an
IRA portfolio, cited by 27% of respondents, is to improve
diversification and risk-return characteristics. Another advantage,
cited by 26% of participants, is the opportunity to invest in
businesses, sectors, and industries about which they have personal
knowledge or expertise. Others (16%) think the most significant benefit
is the potential to generate income for their retirement portfolio.

The most widely sought after asset classes for self-directed IRA
investors are real estate and private equity. Over half of respondents
(52%) say they are likely to increase their retirement portfolio
allocation to real estate (ranging from single family investment
property to non-traded REITs) and a quarter (25%) are likely to increase
their allocation to private equity (such as investment in a startup or a
fund). Interest in these two categories is also reflected in PENSCO’s
new account activity. In fact, 35% of new accounts at PENSCO in the
first three quarters of this year have invested in private equity, while
32% bought real estate.

“Real estate is popular among self-directed IRA clients because of its
potential for income generation and hedging against inflation, while
private equity offers investors with long investment horizons the
potential for growth,” said Rodriques.

Additionally, a recent U.S. Securities and Exchange Commission vote in
favor of Title III of the JOBS Act, which will allow private companies
to openly solicit individuals and non-accredited investors1,
paves the way for everyday investors to get access to private placements
through online portals. Many PENSCO investors surveyed are already
exploring these opportunities. The survey found that close to 30% of
investors already have some level of understanding of how to invest in
private equity through a crowdfunding platform.

“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,” said Rodriques.



PENSCO Trust Company has been helping investors use their retirement
account funds to invest in real estate, private equity and other
non-exchange traded assets since 1989.

As the trusted custodian of over $10 billion in assets on behalf of more
than 45,000 clients, PENSCO works with financial institutions, capital
raisers and financial advisors, as well as self-directed investors who
typically have a point of view about alternative investments based on
their own knowledge or expertise and want to put their tax-advantaged
retirement dollars to work in these opportunities.

To learn more visit

PENSCO Trust Company performs the duties of an independent retirement
custodian, and, as such, does not provide investment advice, sell
investments or offer any tax or legal advice. PENSCO is not affiliated
with any financial professional, investment, investment sponsor, or
investment, tax or legal advisor; including any who are listed in The
Marketplace. Clients or potential clients are advised to perform their
own due diligence in choosing any investment opportunity as well as any
professional to assist them with an investment opportunity. Alternative
investments are not FDIC insured and are subject to risk, including loss
of principal. The list of individuals in The Marketplace should not be
considered a complete list of individuals/firms with whom you may work,
and is being provided for informational purposes only. It is not
intended as an individual recommendation, and each individual is
encouraged to perform their own due-diligence on any financial
professional with whom they intend to work.

1 Press Release: “SEC Adopts Rules to Permit Crowdfunding,”
October 30, 2015


PENSCO Trust Company
MacMillan, 718-801-8862