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WSJ's Sender: Small Money Risks With Private Investing

Monday, 18 Dec 2006 | 12:29 PM ET

Average investors have never been able to invest the way the “Big Wigs” do on Wall Street. This morning's Wall Street Journal Report says, that now it's a lot easier for the little guy to gain access to private money investing, such as private equity and hedge funds. On today’s “Morning Call” CNBC’s Becky Quick took a closer look at the risks with Wall Street Journal Senior Special Writer, Henny Sender.

Small Investor, Big Money
New products are giving average investors access to private investing, according to Henny Sender, Wall Street Journal Senior Special Writer. She shares the pros and cons of this with CNBC's Becky Quick

“The first question you should ask yourself,” says Sender, “Is do you want to get in on this? Because, as a small investor you are not going to attract the same terms as wealthy families. The first thing that hits you is, there are fees upon fees upon fees. And there is a whole level of uncertainty of what you’re investing in.”

One of the happy things is that private equity firms are now raising most of their money from private pension funds. So if you’re in a pension fund – you might experience the benefit.

The bottom line: In many ways private equity and hedge funds are attractive for big money, professional investors – but for individuals, the opportunities aren’t nearly as attractive.

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

  • Tyler Mathisen co-anchors CNBC's "Power Lunch." Mathisen also co-anchors "Nightly Business Report produced by CNBC."

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Kenny Polcari