CAPITAL ARCHITECTURE
An Investment Portfolio Is Only Part of the Picture
Significant private capital is defined by more than the assets in which it is invested. It encompasses banking relationships, liabilities, future requirements, public and private investments and, in some cases, business interests and exposures that sit outside the conventional investment portfolio.
The challenge is not simply to select high-quality investments, but to understand how the different components of capital interact, influence one another and serve the investor's objectives.
HOLZ considers capital as an integrated whole, where each asset, exposure and liability matters in relation to the broader picture. The aim is to understand how these components fit together and to develop an investment framework aligned with the investor's objectives, liquidity requirements and risk profile.
THE CAPITAL STRUCTURE
Different Components of Capital. One Integrated View
01
Liquidity & Flexibility
Capital reserved for commitments, ongoing needs and future opportunities. Liquidity planning considers not only cash available today, but also expected cash flows, future obligations and the ability to act as market conditions change.
02
The Liquid Portfolio Core
The liquid foundation of the investment portfolio, spanning equities, fixed income, currencies and other tradable assets. Its composition is evaluated against the investment policy, risk diversification and its role relative to the client's wider capital.
03
Private Market Investments
Exposure to investments that are not traded daily, including private equity, private credit and other strategies. Their inclusion calls for careful consideration of lock-up periods, capital commitments, investment and realisation schedules, and available sources of liquidity.
04
Tailored Investment Strategies & Structures
Solutions designed for a defined investment need, including market exposure, income generation, risk hedging or a conditional return profile. Each is assessed against alternatives, costs, counterparty risk and its role within the overall portfolio.
05
Concentrated Holdings & Business Capital
Founder shares, equity-based compensation, ownership interests in private companies or a substantial position in a single asset can account for a significant share of overall wealth and risk, even when held outside the traditional financial portfolio.
PORTFOLIO CONSTRUCTION
Beyond Asset Allocation: An Integrated Capital Structure
Even an investment that has passed rigorous due diligence may not be suitable for every investor's capital structure.
Investment decisions must therefore be assessed not only on expected returns or the characteristics of an individual asset, but also on their effect on existing exposures.
Relevant considerations include concentration, correlations, liquidity, future commitments, currency exposures and the resilience and flexibility of the overall capital structure across different market scenarios.
The objective is to build an investment framework in which each component is selected not only for its individual merits, but also for its contribution to the whole.
ONGOING ARCHITECTURE
Capital Structures Evolve as Circumstances Change
Liquidity events, business developments, new investments and changing market conditions can alter the balance between different components of capital and the need for particular financial solutions.
Capital architecture is not a one-off exercise. It is a decision-making framework, revisited as needs, assets and circumstances change.
This supports continuity in investment decisions over time, even as the capital structure itself evolves.