Institutional investors have different requirements than private individuals – and their investment portfolios differ accordingly.
When pension funds, foundations or multifamily offices invest, different rules apply. Novum Partners Geneva develops asset allocation strategy concepts that take institutional characteristics into account. Long-term horizons, regulatory requirements and liquidity requirements shape the decisions.
The multifamily office Novum Partners SA, Geneva, has strengthened its focus on institutional approaches to asset management. Unlike traditional private client services, the focus here is on systemic considerations. With over 5 billion Swiss francs under management, the Geneva-based company has the necessary scale to implement institutional strategies. Experience from 14 jurisdictions is incorporated into tailor-made solutions that go far beyond traditional family office services.
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What makes institutional thinking different?
Imagine you are not managing your own money, but that of thousands of pensioners. Suddenly, you are thinking in different dimensions. No longer: ‘Can I afford this?’ But rather: ‘Can I afford not to do this?’
Institutional investors are rarely concerned with personal preferences. Instead, they focus on systemic relevance. A pension fund cannot simply make losses for a year. Behind it are people who depend on their pensions.
This responsibility changes everything: risk appetite, time horizons, reporting requirements. What is a luxury for private investors becomes a necessity here.
Novum Partners, formerly known as Novum Capital Partners SA, recognised these differences early on. Institutional clients need different solutions than wealthy individuals.
Regulation as a framework
Normal investors can buy whatever they want. Institutional investors cannot. There are quotas, limits and regulations. This can be frustrating at times, but it is often helpful because it protects against foolish decisions.
For example, a foundation may invest a maximum of 30 per cent in alternative investments. But this prevents it from putting all its eggs in one basket, even if that basket looks tempting.
Time horizons beyond human dimensions
A private investor might plan 20 years ahead. A university thinks in terms of centuries. These time frames radically change the perspective.
Long-term thinking as a competitive advantage
Warren Buffett says: ‘Time is the friend of the wonderful business.’ This is particularly true for institutional investors. They can sit out lean periods that would drive private investors to despair.
2008 was an example. While private investors sold in panic, smart institutional investors bought. Five years later, they were the winners. Timing? No. Simply a longer view.
At Novum Partners SA, Geneva’s family office services, this long-term perspective is incorporated into every component. It is not what happens next year that is relevant, but what could happen in ten years.
Riding demographic waves
Institutional investors have an advantage: they can identify demographic trends early on and exploit them. Take healthcare, for example. While everyone is complaining about rising costs, they see investment opportunities.
An ageing society needs more medical care. That’s logical. So they invest in healthcare stocks, medtech companies and nursing homes. Ten years ago, these were niche investments; today, they are mainstream.
Alternative investments as a portfolio component
While private investors often hesitate, alternatives are part of the standard repertoire for institutional investors. Private equity, hedge funds, infrastructure – all normal.
Why institutional investors approach alternatives differently
The main difference? Size matters. An institutional investor can put 50 million into a private equity fund without feeling the pinch. A private investor would be risking their entire fortune.
This size gives access to better terms. Institutional fees are lower. Due diligence is more professional. The network is denser.
Novum Partners SA leverages these advantages for its clients. Not every family can invest £50 million on its own. But together with others? Definitely.
Illiquidity as a feature, not a bug
Private investors hate illiquidity. They want to be able to sell at any time. Institutional investors see things differently. Illiquidity is rewarded – with higher returns.
One example: infrastructure investments. Wind farms, power grids, airports. Boring stuff, but stable cash flows for decades. A perfect match for institutional needs.
Credit consulting for complex structures
Institutional investors also think differently when it comes to financing. Not just: ‘How cheap?’ But also: ‘How secure?’ and ‘How flexible?’
Diversification among lenders
A pension fund does not simply borrow money from its house bank. It structures complex financing arrangements with several partners. Why? Risk management.
If one lender defaults, others step in. If interest rate policy changes, renegotiation is possible. If new opportunities arise, you remain flexible.
At Novum Partners Geneva, this approach is also incorporated into private financing structures.
Why should wealthy families finance themselves less professionally than institutional investors?
Reporting and governance at institutional level
Institutional investors must be accountable to supervisory authorities, beneficiaries and the public. This shapes their requirements for reporting and transparency.
Compliance as an ongoing issue
Every transaction must be documented. Every decision must be justified. Every risk must be assessed. Sounds bureaucratic? It is. But it is also necessary.
The multifamily office has learned from this and offers similar standards to private clients. Not because it is mandatory, but because it is better.
Investment committees as decision-making bodies
Institutional investors rarely make gut decisions. Instead, they have investment committees that systematically evaluate and decide.
The typical structure of such a committee is as follows:
- Chair with overview knowledge
- Specialist in equity investments
- Expert in fixed income
- Alternative investment specialist
Every vote counts. Every perspective is heard. Collective wisdom instead of individual decisions.
New yacht consultancy services in an institutional context
Institutional investors also think in a more structured way when it comes to luxury goods. A yacht is not just a toy, but an asset with specific characteristics.
Yacht investments as an alternative asset class
Some institutional investors are discovering yachts as an investment class. Not for their own use, but as a charter investment. The returns can be attractive, especially in the luxury segment.
Novum Partners also works with expert Benedetta Iovane on such structured approaches. Due diligence for yachts? Yes. Valuation models for charter income? Yes.
Structuring for tax efficiency
Institutional investors also optimise their tax burden when it comes to luxury goods. Flag selection, ownership structures, charter agreements – everything is carefully considered.
Owning a yacht through a Maltese company can bring tax advantages. The same applies to charter income collected through a Dutch structure. Complex stuff, but legal and efficient.
Lessons learned for private investors
What can wealthy families learn from institutional approaches? A whole lot.
Systematic thinking beats intuition
Institutional investors rely on processes, not gut feelings. Investment checklists, due diligence standards, regular reviews. Everything is systematised.
Private investors can benefit from this.
Instead of buying spontaneously, it is better to follow a fixed process. Instead of selling emotionally, evaluate systematically.
Diversification in all dimensions
Institutional investors think about diversification more broadly. Not just different stocks, but different asset classes, regions, currencies, time horizons.
Novum Partners SA Geneva applies this philosophy to private investment portfolios. The result? More robust portfolios that perform well even in times of crisis.
A trend is emerging: wealthy families are increasingly adopting institutional practices. Family offices are becoming more professional. Investment processes are becoming more systematic.
This is no coincidence. In an increasingly complex world, amateur approaches are no longer enough. If you want to be successful in the long term, you have to act professionally. Sometimes less emotion and more professionalism is exactly what is needed.
