Retirees Aren't Clamoring for PEU Investments

St. Louis Business Journal reported:

Edward Jones CEO and Managing Partner Penny Pennington said her firm's clients are not clamoring for access to investments in private companies but said that could change over time.

Private equity investments, which are less liquid and more risky, historically have been the purview of very wealthy investors and outside the reach of most retail investors. "We're not seeing that demand yet in our marketplace," Pennington said. "Though what we know is what's attractive to ultra-high-net-worth individuals becomes more attractive, and manufacturers look at getting it more into retail investments. So I am hearing a little bit about that, but I think it will take a bit."

Pennington's comments came during an interview with Bloomberg about the economy and the current investing climate. 

As for the risk of private equity investments, Pennington said: "Private equity is illiquid. When you are talking about the need for liquidity, when you are talking about folks getting into a comfortable retirement and needing to produce income, private equity is not set up right now to do that.

Thus private equity investments will need to be dressed in a way that cons the retiree into thinking they have a liquid, predictable income producing asset.   Rest assured it will come with layers of fees.

Harken back to Carlyle Capital Corporation.  Forbes reported Carlyle's sales pitch to Michael Huffington, who sued The Carlyle Group for losing his $20 million investment:

the fund was "conservative,' 'low risk' and that the 'downside [was] very limited"

Huffington was concerned about the safety of private equity underwriters (PEU).

Huffington expressed reservations about the risky nature of private equity, but Rubenstein responded that he would "look for something appropriate for you."

Carlyle Capital Corporation was listed in Amstedam, giving it the appearance of a stable investment.  The mortgage backed security firm was levered 32 times.  Four days ago Carlyle Group co-founder David Rubenstein said on Sunday Morning:

"What we've learned over thousands of years is that history repeats itself," Carlyle Group co-founder David Rubenstein said. "And if you can find the solutions that people came up with or the mistakes they made in trying to deal with these problems, you're probably going to avoid some of the mistakes that people made in the past."

Beware whatever the PEU boys package for retirees needing safe, predictable income.   Someone may be telling you a story. 

Someone has to be the final mark for the greed and leverage boys holding trillions in dry powder.  Beware the spark that makes it go "Boom."