Have you Invested In a Billion Dollar Unicorn and Don’t Even Know It?
Technology start-ups, internet stalwarts, the next big SaaS to change the way we do business; these are all companies we wish we could invest in at an early stage. For most of us, however, we rarely have the opportunity to get in on the ground floor of a unicorn unless we happen to be walking by a garage in Palo Alto, or have the discretionary income to invest a few $100,000 as an angel. Mutual funds, on the other hand, are available to most of us. More often than not, when we tick that “aggressive” or even “moderately aggressive” portfolio stance in the offices of T. Rowe Price or Fidelity, they could be investing in a unicorn, and we would not even know it.
Many the largest mutual funds have provided funding to some of the technology world’s highest valued start-ups, a trend that developed after many mutual funds missed out on purchasing pre-IPO shares of Facebook. Due to the shaky IPO market, companies have been reluctant to go public. Their reluctance, in turn, has given life to the phenomenon known as the private IPO – a large, late-stage funding round providing the capital necessary without all the drawbacks of going public.
The following investment firms have shares in either one or many unicorns, with the shares directly tied to mutual funds. High growth funds are typically reserved for investors with a longer investment horizon. However, for those with the appetite to facilitate such investments, some of these funds do make it into the “moderate” and “moderate-aggressive” portfolio choices of many mutual fund investors. Examples of these funds would be Fidelity’s Contrafund and their High Growth/Blue Chip Growth funds. Two T. Rowe Price funds with unicorns including its Horizons Fund and Global Technology Fund. Finally, smaller but well known for their mutual funds would include Hartford’s Growth Opportunities fund and Vanguard’s U.S. Growth fund, all of which contain some unicorns in their portfolios. In some cases, these funds appropriate well over 1% of their total portfolio to private tech startups and unicorns. Below you will find a list of some of the most prominent mutual fund investment firms and the unicorns that received their investment.
Whether you find this information troubling or invigorating, it is happening, and at a pace greater than ever seen before in private placements. With IPOs being delayed, private placement tech investments remain an enticing choice for alpha seeking fund managers. Future unravelings of mutual fund investments in unicorns may reach the headlines more often, especially when those unicorns’ lofty valuations take a hit – as was the case last week when it was widely publicized that Fidelity marked down Snapchat in March.document.currentScript.parentNode.insertBefore(s, document.currentScript);