Can these funds help you to achieve financial independence sooner?

Can these funds help retail investors to diversify their portfolios and boost performance?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Buying shares in an investment company is a quick and relatively inexpensive way to help diversify your investments. It’s can also a great way for retail investors to gain access to sectors or assets you wouldn’t usually be able to own.

So if you’re looking at including some unlisted investments to your portfolio, then you may want to check out these two specialist funds.

Energy

When most investors think about getting exposure to the oil and gas sector, they usually only consider oil majors, such as BP and Royal Dutch Shell, and small-cap exploration and production (E&P) players like Premier Oil and Genel Energy. There’s not a lot on offer in the middle ground though, which is why closed-end investment company Riverstone Energy Limited (LSE: RSE) seeks to bridge the gap.

Riverstone offers exposure to both the exploration & production and midstream energy sectors by investing in a diversified portfolio of onshore and offshore assets. The portfolio’s 14 active investments include significant assets in the low-cost Permian & Eagle Ford shale basins, which makes it well placed to offer investors resilience and growth amid near-term commodity price volatility.

Shares in the investment company have fallen by as much as 3% today after the company reported a 1.8% decline in its net asset value (NAV) to $19.74 per share for the for the half year to 30 June. And due to sterling’s modest recovery since December, NAV per share in sterling terms decreased even further, by 6.9%, to £15.16.

Although these figures seem disappointing at first glance, they aren’t so bad in light of the 14% decline in the West Texas Intermediate oil price over the same period. As such, this demonstrates the continued resilience of Riverstone’s investments in the current low energy price environment and reflects its superior operational performance.

Moreover, valuations seem attractive, with shares in the investment company currently trading at a 13% discount to its NAV. This makes Riverstone Energy a tempting play in the energy sector.

Private equity

Private equity has been one of the fastest-growing and best-performing alternative asset classes in recent years, but it is, for the most part, off limits to retail investors. Investment trusts, such as Princess Private Equity (LSE: PEY), therefore give retail investors an indirect route into this growing asset class.

What’s more, unlike most private equity funds on the market today, which are fund of funds, Princess also invests directly into unlisted equity and debt investments. As direct investments now account for more than three-quarters of the portfolio, the fund has a hands-on approach to value creating, which avoids an extra layer of management and reduces costs for investors.

In addition to diversification advantages, there’s also the potential for greater returns by including private equity investments in the portfolios of ordinary investors. Recent studies show that private firms often grow faster than public ones, as private firms on the whole have better growth prospects and are generally more responsive to new opportunities.

Princess Private Equity today reported a 2.7% increase in its NAV in the second quarter to €10.77, meaning its shares are currently trading at a 7% discount.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

How much would I need to invest in income shares to earn £300 a month?

What kind of lump sum would be required to earn £300 a month by taking advantage of some of the…

Read more »

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »