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What Is The Difference Between Public Securities And Private Equity Real Estate Investments?
"Public securities are highly regulated and widely available, while private securities have fewer regulations and are only available to a select group of investors."
Cynthia Aasen | Registered Dealing Representative
Public securities are securities that are available for purchase by anyone and are traded on a public market such as a stock exchange. Examples include stocks and bonds issued by publicly traded companies.
Private securities, on the other hand, are securities that are not publicly traded and can only be purchased by a limited number of investors, often through private placement. Examples include privately issued stocks, bonds and alternative investments such as real estate or hedge funds.
The main difference between the two is the level of regulation and accessibility. Public securities are highly regulated and widely available, while private securities have fewer regulations and are only available to a select group of investors.
What are the Different Risks Associated with Public and Private Securities?
The risks associated with public securities and private securities can vary, but here are some of the key differences:
Public securities:
- Market risk: The value of publicly traded securities is affected by the overall stock market and economic conditions, which can be difficult to predict.
- Credit risk: The risk that the issuer of a public bond will default on its debt obligations.
- Interest rate risk: The risk that changes in interest rates will negatively impact the value of a bond.
- Liquidity risk: The risk that an investor may not be able to sell their securities quickly or at a fair price.
Private securities:
- Information risk: There is often less information available about privately held companies and their financial performance, making it difficult for investors to fully understand the risks involved.
- Valuation risk: Valuing private securities can be more difficult, as there may be a lack of market data and historical prices to use as a reference.
- Exit risk: It can be more difficult for investors to sell their private securities, as there may be limited secondary market options available.
- Concentration risk: Private securities are often tied to a single company or investment, which can result in a high concentration of risk for the investor.
It’s important to note that both types of securities can come with risks, and that investing in either public or private securities should be done after careful consideration of the individual’s goals and risk tolerance.
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Licensed as a professional real estate agent for 25+ years, Cynthia’s expertise is diverse – real estate syndication, development, multi-family value-add and strata ownership. Dually registered as Associate Broker with eXp Realty Canada Inc. and Dealing Representative with Integrated Equities Inc. she is able to offer investors access both public and private real estate investments in North America’s leading markets.
Cynthia and her team act as advisors helping you make informed decisions. Since 2015 they have raised over $100 million in limited partnership equity representing $400 million in real estate transactions since inception in 2015. In addition, they sold over 200 individually titled investor properties, offering “true” turn-key solution for active real estate investors – “You invest, we’ll do the rest”.
