Why your capital might not be yours
The phone-call test that belongs in your pre-commit checklist.
Three years ago, I sat down to design the Blue Eyed Private Debt Fund I.
Before I picked the structure, I made one decision.
I wanted to be the person investors could actually reach.
That decision cost me yield.
It cost me the ability to lock capital for ten years and let it compound on itself. It cost me the convenient five-year hold structure. It cost me a few hundred basis points of spread I could have squeezed by going longer-duration.
I made the trade anyway.
The Reality: investors get hurt by what they couldn’t get out of, not by what they bought.
Here’s the part nobody talks about in the SDIRA boom right now. The yield is the marketing. The structure is the product. And the structure rarely gets marketed.
Last week an investor called me to say thank you. Not for a return. For picking up the phone.
His IRA custodian had answered about 70% of his emails over the last two years. Statement errors he couldn’t get fixed. Three years left on the lock.
He didn’t want advice. He wanted to know he wasn’t alone in finding out his capital didn’t have a phone number.
Ask “who do I call on Tuesday at 2pm” before you ask “what’s the net return.”
Capital flexibility is a risk factor, not a perk. It belongs in the pre-commit checklist, not the post-mortem.
Investors discover what they bought between year two and year four. By then, the structure is the cage.
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The SDIRA market is the hottest it’s been in a decade. Sixteen to twenty percent return pitches. Diversified pools. Fractional ownership of property portfolios. The yield numbers do most of the convincing.
The numbers aren’t lying. They’re just not the whole product.
I sized our debt fund at 12-month notes with quarterly distributions because I wanted investors to be able to verify reality four times a year. Not five years from now. Four times a year.
The number one piece of feedback I get on the fund isn’t the rate.
It’s that I answer my own emails.
That’s not a feature. That’s a structure.
Yield is the easiest variable. Liquidity, communication, and reachability decide whether the yield ever shows up in your hands. That’s the difference between hoping and knowing. And between locked and free.
—Jon
P.S. If you want to know how the Blue Eyed Private Debt Fund I handles liquidity and communication, reply to this email. I answer my own.