Merchant Cash Advances (MCAs) have emerged as a popular asset choice for family office investments, gaining traction for their unique blend of stability and growth potential. This blog will highlight why and how exactly MCAs can bring a sought-after opportunity to family office investors.
Understanding Merchant Cash Advances (MCAs)
Merchant Cash Advances (MCAs) are not typical loans but rather a sale of a business’s future revenues.
In an MCA agreement, businesses receive an upfront sum and, in return, commit a portion of their future sales to you, the investor. Unlike traditional lending methods where periodic interest is charged, MCAs involve a one-time fee determined at the outset. This unique mechanism means a distinct opportunity for family offices that are looking to diversify outside of conventional asset classes.
Our results have been very promising, with Q2 results from 2023 showing that we achieved 100% of our target returns.
Predictable Returns: The Stability Factor
For family offices, stability and predictability are top priorities. Your job is to protect your client’s capital, and then to grow it.
MCAs can be a valuable addition to family office investments because of their daily remittances. Merchants begin repaying their advances from day one, which means you can take advantage of compound velocity. Compound velocity refers to a specific benefit that can be gained from investments that pay out more regularly than standard stock dividends.
Our 12-month 10% MCA note, for example, returns payouts to you every month. Any returns can then be immediately reinvested, giving you the power to compound any gains at a quicker rate.
Low Correlation with Stock Markets: Diversification at Its Best
Family offices know that to protect and build their client’s wealth, diversification is paramount. MCAs can bring valuable diversification because of their low correlation with stock markets.
While equities face turbulent times due to geo-political events and inflation rates, MCAs can offer some insulation from these downward pressures, offering a potential buffer against market volatility.
The low correlation of MCAs can add an extra layer of security for family offices. Including alternative assets in your portfolio is one of the best ways to hedge against volatility, making MCAs a strategic addition to the family office investment toolkit.
Supervest’s Role in Enhancing MCA Investments
For decision-makers in family offices, Supervest can be a trusted ally, providing a gateway to a robust selection of MCA opportunities.
We are proud of our rigorous safety measures and industry-leading due diligence. Each MCA deal is meticulously curated, underscoring our focus on presenting only high-quality investment opportunities.
We uphold strategic risk management measures like the 5% exposure cap, making sure that you are not over-exposed to any one MCA deal. The exposure cap ensures diversification within an already diversified asset class for maximum risk spread.
MCAs stand out as a potentially valuable addition to family office portfolios, blending predictable returns with market resilience. At Supervest, we amplify these advantages, streamlining the entire investment process for you.
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