EQUITY FUNDS
What is an Equity Fund?
Real Estate Fund:
Instead of only acquiring a single identified real estate property, a ‘sponsor’ sells interests in entities to fund multiple real properties, a diversified portfolio, for investors. Typically, the sponsor identifies the investment criteria, takes on the administrative reigns as ‘manager’, controls most decision-making, and contributes mostly sweat equity in lieu of or to supplement monetary equity. Investor members, who typically invest based on the track record of the sponsor, rely on the sponsor to make the real estate lucrative (whether through construction, development, leasing, repurposing, etc.), but do have certain voting rights. The sponsor is compensated via fees and a profit-sharing arrangement of usually 30-40% to ensure that incentives are aligned.
Mortgage Loan fund:
Venture capital funds:
Instead of taking on taking a risk no a single company investment, a fund manager invests into various companies with other investors.