Different private asset investment structures deal with the liquidity in different ways, says James Lowe, sales director – private markets at Schroders.
Lowe says: "If you think about an investment trust; that's a great structure for illiquid assets, because it is a permanent capital pool, and the assets sort of sit within that. [To get in and out], you actually have to buy and sell shares on the stock market. So there's always liquidity at a price.
"You may get a big discount or big premium, which doesn't actually correlate to the net asset value. But you can get in and out on a daily basis, generally, if you want to, at a certain price.
"So that sort of mitigates illiquidity mismatch, because when investors want their money back, we just go and sell them on the stock exchange."
With a semi-liquid fund, which is a different structure, the approach to mitigating illiquidity mismatch can be on multiple fronts, Lowe adds.
In this video, Lowe speaks about the opportunities and challenges in private markets and how regulation is changing the sector.
This video is worth 30 minutes of CPD.
