Investment sentiment review

We feel that currently local investor interest leans mostly toward fixed-income and lower-risk investment opportunities. This is evident also in the latest over-subscriptions of the recent bond issues (for example, by Given and Mapon). This can be explained by the push towards alternatives due to the high inflation environment. However, we are worried that many investors are often buying financial instruments that they don't fully understand or cannot evaluate. Particularly concerning is often the lack of diversification among retail bond investors. History shows, that this often leads to rather painful lessons in loss of capital.?

The Baltic stock market continues to be cold, while venture capital and business angel investment activity are noticeably lower than 2 years back. Based on (mostly anecdotal) evidence we see a growing number of business angels that have made few unsuccessful investments and have given up on this investment category. As usual, effective diversification would be part of the solution.?Studies suggest that an investment portfolio should have a minimum of 10 companies.?

Another continuing trend is increasing awareness of geographical diversification. Some investors are seeking real estate rental purchases abroad (from our evidence one of the hardest diversification routes), while others are creating geographical allocation proportions and similar tools. We will be summing up our observations and practices on how to build a passive investment portfolio that is well geographically diversified in a separate article next month.?

LOANS TO BUSINESSES?

While one might be chasing investments that double your money at no risk (please let us know if you find such), investments in loans to Baltic businesses have provided stable returns in excess of 10% per year. The following table shows the annualized returns of the Capitalia platform and other asset classes such as a portfolio in shares, bonds, and more. In short, the returns from loans have been more stable and higher than in any other category. ?

To make this investment category even more accessible to investors, we have lowered our minimum investment per project amount from EUR 1,000 to EUR 200. Now a well diversified portfolio can be built from EUR 5,000 as we recommend investors to invest in 25 loans or more. Our auto-invest tools are available, as well as individual portfolio-building services, tailored to each investor's preferences.?

FUNDS BY CAPITALIA

We have created a number of cost-efficient investment funds that offer truly passive and diversified investment experiences to our investors.?

Bond fund: is designed to provide investors easy access to a diverse portfolio of high-yield corporate bonds issued by companies in the Baltic States. With a minimum investment of EUR 25,000, the Fund aims to maximize returns for its investors while minimizing risk by carefully selecting investments. In 2024 Q1 fund reported a 9.68% annualized net return. The fund made 3 new investments: Orkela (real estate development), Mapon (fleet management and asset tracking), and SBA Furniture Group (furniture manufacturing).

Co-investment fund: is a passive venture capital fund that co-invests in seed and pre-seed stage companies alongside other venture capital investors. The Fund has 11 investments in its portfolio. The investment period of the Fund ended at the end of 2023, no realizations are made to date.

SECONDARIES

Capitalia investors network has grown to more than 1000 now. We are continuously seeking additional ways to help our community. For that purpose, we also seek to help investors to exit their alternative investment assets. In case you have some investments that you want to exit early - let us know the key details via email - [email protected]. We will review the investments and help you sell them via our network. We can consider any investments that are not publicly traded - various funds, equities, portfolios, syndicates, and more - let's talk.