At Caliber, we pride ourselves on leading the market in providing individual accredited investors with well-structured alternatives to traditional investments.
What is an Accredited Investor?
As per the Securities Act of 1933 and defined by the U.S. Securities and Exchange Commission (SEC) in Rule 501 of Regulation D, an accredited investor must have an earned income exceeding $200,000 per year (for the past two years) or $300,000 when combined with a spouse. There also must be a reasonable expectation of the same or increased income level for the current year. Alternatively, one can be deemed an accredited investor if an individual – either alone or combined with a spouse – has a net worth greater than $1 million, excluding the value of the person’s primary residence. You can dig deeper at the SEC’s website here.
Benefits of Accreditation
Accredited investors can invest in certain unregistered investments such as private placements, hedge funds, venture capital and private equity real estate funds like those offered by Caliber. The regulations were initially created by the SEC as a way to protect investors who may not be able to weather the financial risks associated with unregistered securities. Because of their high net worth, accredited investors are considered more capable of taking on increased risk and more sophisticated in their investment knowledge.
New Laws Make Accreditation More Accessible
Forbes recently reported on a bill that passed the U.S. House of Representatives with a near-unanimous vote to widen the definition of an accredited investor. If passed, this would provide access to the same forms of investment for current accredited investors to the middle class. It is expected the Senate will take up this issue in 2019 and we hope to see a test where a potential investor can certify their status as a capable, knowledgeable investor. It seems counterintuitive that you can hire a realtor and buy a rental property but cannot buy into a fund that owns hundreds of rental properties. We’ll be watching to see how this effort progresses.
Other Investment Options
Not everyone can qualify as an accredited investor. In fact, the bulk of the population falls into the non-accredited bucket, but there are still plenty of options to get in on the investment game. Things like crowdfunding and index funds are open to non-accredited investors as well as the relatively new Regulation A+ offerings.
Created through the JOBS Act of 2012, Regulation A and A+ (Reg A+) creates an opportunity anyone to invest in private companies. Similar to an IPO, a Reg A+ campaign is a public offering, but makes purchasing shares of the company available to the general public, not just accredited investors.
Where Does Caliber Fit?
In addition to working with accredited investors, Caliber supports registered investment advisors and wealth managers seeking alternative investments for their clients. Operating under the principles of integrity, responsibility, discipline and transparency, Caliber provides its more than 500 accredited investors with well-managed, diverse, asset-based investment strategies.
Interested in learning more about the investment opportunities offered by Caliber? Contact us today.