In the previous issue of Poseidon’s Foresight, we delved into the unique investment advantages enjoyed by billionaires, including fee advantages and exclusive investment channels such as hedge funds and private equity funds. However, for investors who are not yet billionaires but have similar investment dreams, can they also access these investment opportunities?

In this article, we will introduce the concept of iLab, which has gradually taken shape within Poseidon’s team after years of industry experience and in-depth research and discussions. The core idea behind iLab is to build a bridge for professional investors to "Invest Like A Billionaire," thereby enabling them to enjoy similar investment opportunities and advantages. In addition, Poseidon firmly believes in the transformative power of AI, whether it be in enhancing efficiency or portfolio allocation and risk management. Therefore, we have been closely monitoring the development of AI and integrating it into the innovative iLab platform, aiming to provide investors with a brand-new investment experience.

Wealth Preservation: The Primary Objective of UHNWI

Ultra-high-net-worth individuals(UHNWI) typically accumulate substantial wealth through inheritance or by establishing their own businesses. Under this premise, their careers often serve as the primary driver of wealth growth. However, when it comes to managing their accumulated wealth, their focus shifts to wealth preservation. In this case, their priority lies in investing for long-term capital preservation (Return off Capital), and their expected investment returns (Return on Capital) may not be that high. Billionaires exhibit patience in their investment approach, believing that time will help generate returns. Therefore, they favor investments with lower volatility but relatively rewarding assets. With ample liquidity, UHNWIs can trade time for returns by allocating their assets to investment opportunities that offer lower liquidity but stable appreciation potential.

Risk management is an essential aspect of wealth preservation. In our previous work, we mentioned that billionaires have gradually increased the allocation of alternative investments in their portfolios, including hedge funds and private equity, to achieve portfolio diversification and reduce portfolio risks. Additionally, we have observed that portfolio hedging serves as an effective means of reducing volatility. Commodities such as gold, silver, and copper have long been popular hedging instruments. Readers can refer to our previous article on gold and portfolio hedging for a more detailed analysis. In addition to diversifying asset classes and hedging portfolios, UHNWIs also focus on diversifying their investments across industries. Through secondary markets or private equity funds, they participate in flourishing and rapidly growing sectors such as AI and electronic vehicles. Meanwhile, they also invest in industries such as retail, healthcare, infrastructure, and defense that perform well in unstable times.

Industry-Leading Billionaire-Level Investment

It is well known that top-tier boutique hedge funds and private equity funds only offer investment opportunities to institutional investors and a select few UHNWIs. Moreover, the minimum investment threshold for some funds exceeds $10 million, making it difficult for regular professional investors to access these high-quality investment opportunities. Poseidon Partner can leverage its institutional advantages to break through these information barriers and investment thresholds, presenting the exclusive investment opportunities enjoyed by UHNWIs to a broader range of investors. Simultaneously, we actively seek flexible approaches to lower investment thresholds and transaction costs and enable more individuals to enjoy investment opportunities on par with UHNWIs.

In the following paragraphs, we will share our recent investment solution and insights. Since the interest rate hike in the US, the elevated US interest rates have provided deposit investors with sizeable risk-adjusted returns, making it an excellent choice for stable wealth growth. It, therefore, becomes particularly important to screen and compare the deposit rates offered by different banks and seek the optimal. Meanwhile, instead of being stuck with rate comparison, we proactively consider how to maximize returns with greater flexibility.

Apart from time deposits, cash notes have become an attractive opportunity in the "treasure trove" of UHNWIs. These notes are issued by major investment banks and are linked to the Federal Funds Effective Rate, which is close to the prevailing deposit rates. Unlike time deposits that can only be withdrawn upon maturity, cash notes can be redeemed immediately, with a processing time of only T + 1 (i.e., the second business day after submitting the withdrawal request). This feature is well-suited for clients who have idle cash in their investment accounts but are still awaiting investment opportunities. Clients can promptly reallocate funds when the next growth investment opportunity arises while enjoying higher interest income compounded daily. In contrast, early withdrawal of time deposits would result in no interest income or even penalty fees.

Call deposits offered by banks possess similar flexibility to cash notes, but their interest rates are relatively less competitive. For example, in recent market conditions, the annualized interest rate for call deposits ranges from 3.5% to 4.5%, while after deducting various transaction costs, investors can still enjoy an annualized return of around 5% with cash notes. Considering the opportunity cost of holding cash, investing idle funds in cash notes maximizes investors' returns.

Summary

Poseidon’s iLab is shaped by the objective of wealth preservation, diversified and selected investment in alternatives, and flexible management strategies. Looking ahead, Poseidon Partner will gradually launch the iLab series of products, creating exclusive investment opportunities for professional investors. We believe that, with our diverse product offerings, each client can find high-quality products that best align with their investment portfolios and have the same investment experience and channels as UHNWIs. If you are interested in our iLab products, we cordially invite you to follow our official website and LinkedIn account to stay updated on our latest products.

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