Alternative Investment Policy Guidance

Alternative Investment Policy Guidance

Definitions

  1. Alternative Investments: These are non-publicly traded financial assets that are typically illiquid and less regulated. Examples include private equity, hedge funds, real estate, commodities, and collectibles.

  2. Accredited Investors: Individuals or entities meeting specific financial criteria, such as a net worth over $1 million (excluding primary residence) or an annual income over $200,000 ($300,000 with a spouse/partner) for the past two years.


Policy

Mutual Advisors, LLC (“Mutual”) allows advisors to recommend investments in alternative investments, provided that the alternative investment undergoes a thorough due diligence review by the firm. This review includes assessing the investment's risk, management, fees, and overall suitability for our clients. These investments are only able to be offered to those investors who at least meet the criteria of accredited, as outlined above. Each initial or subsequent investment being made must have an Alternative Investment Risk Disclosure form submitted for pre-approval by Compliance before any subscription documents are submitted for the transaction.

 

Due Diligence Requests

To request due diligence on a new alternative investment, advisors must complete the Alternative Investment Due Diligence Request form available on the Power Portal. This form provides basic information about the fund. After submission, the Client Solutions team will gather additional information and submit the request to Compliance for review. The fund is then presented to the Investment Committee for final approval, a process that can take up to 8 weeks.

 

Mutual has partnerships with CAIS and iCapital, which offer a marketplace of alternative investments. Using products from these platforms can reduce the due diligence time, as Mutual can rely on their processes and reports for much of our review. However, every fund must be approved by the Investment Committee before it can be recommended to investors.

 

Concentration Limits

Mutual has set concentration limits based on investors' liquid net worth: no more than 5% in any one fund and no more than 10% in non-publicly traded alternative investments. These limits, including tiers for qualified purchases or ultra-high-net-worth investors, are detailed on page 3 of the Alternative Investment Risk Disclosure Form, following the Net Worth Worksheet. Any requests to exceed these limits must be approved by Compliance before investing.

 

If you have any questions about the policy or the due diligence process, please reach out to Compliance via the Power Portal.

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