Pooled Investment Vehicle
A Pooled Investment Vehicle (PIV) is the aggregation of several small investments by individuals to fund a larger investment. Basically, multiple individual investors pool money together to create a single larger investment and earn dividends on a pro-rata basis.
Common Types of Pooled Investment Vehicles
- Real Estate Investment Trusts (REITs)
- Hedge Funds
- Mutual Funds
- Non-Fungible Tokens (NFTs)
- Exchange-Traded Funds (ETFs)
- Special Purpose Vehicle (SPV)
EquityMultiple investments are PIVs, as multiple accredited investors pool their money into the offerings managed by our Real Estate Team. More specifically, they are special purpose vehicles (SPV), as are most real estate investments. In a typical common equity investment offered by EquityMultiple, investors purchase fractional ownership interests in an SPV established specifically for the investment, which provides a fractional ownership interest in a property or properties. For EquityMultiple investments, this is almost always a Limited Liability Corporation (LLC).
Advantages of Pooled Investment Vehicles
A PIV offers several advantages, most notably the opportunity to invest in assets otherwise reserved for the ultra-wealthy. Because investors are pooling their money together, each individual is responsible for only a fraction of what the total investment would otherwise be. In this way, PIVs make certain asset classes, such as real estate, accessible to the general public.
PIVs also enable portfolio diversification through exposure to multiple asset classes and sectors in a single vehicle. Because a pooled fund is large enough to deploy across asset classes, industries, geographic locations, and more, investors mitigate the risk of overexposure to a single asset class.
Investors benefit from having their investments professionally managed, as well. The experience of a PIV management team should ensure investors receive the best potential risk/return tradeoff based on their investment objectives. This is especially true for investors who lack significant time and expertise to devote to their investment strategy. That said, we encourage all potential investors to do their own due diligence prior to making any investment decisions.
Visit these resources for more information on Pooled Investment Vehicles and Special Purpose Vehicles.