Talking PointMar 22 2023

When is the right time to invest in private assets?

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When is the right time to invest in private assets?

Investors need to be clear on what they are looking to generate when investing in private assets before they make the decision to do so, according to guests on the latest FTAdviser podcast.

In recent years more avenues have opened up to enable retail investors to access private assets.

Tim Boole, head of product management at Schroders, said: "Now people can access it through various products structures or different types platforms.

"What has really transformed a lot over recent years is there are far more options to access private assets, which has brought to light play for an investor to ask themselves, 'what am I looking to generate by investing in private assets?' That is the key question every investor needs to be clear in before they make that decision."

There have been three main developments over recent years, which has created more options for investors, Boole notes.

One is that product structures have become more innovative. There are different types of structures designed around specific investors.

The other factor is technology, which has also reduced the complexity and made it easier for investors to access private assets and has made it more efficient for investment managers to provide access.

Regulation has also been a key driver.

Boole added: "Regulators have been involved in putting in the right framework in place to enable access to private assets in the right way."

Private assets is a very broad term and comprises anything from private equity, private debt to real estate.

According to Simon Doherty, head of MPS at Quilter Cheviot, this does not necessarily mean it is difficult to measure performance, because it comes down to what the investor is seeking to achieve.

Doherty added: "There are those types of investments that seek to generate a diverse source of income or a regular income stream. In other areas you are looking at high growth investments with quite a high-risk profile.

"It is dependent on the asset class being looked at and private assets can give you very varied experiences in terms of the type of risk/return profile you are achieving."

Historically private asset investing has been seen as more of a domain for institutional investors, endowments, defined benefit schemes and high net worth investors.

Additionally, it has been perceived as difficult to access or in some cases hard to fully understand.

But Doherty said there had been some welcome developments in areas like closed-end companies, where there has been a growth in the number of vehicles providing access to private assets.

But Doherty adds that private assets will not be suitable for everyone, so it is important to look "under the bonnet".