The liquidity challenges of private market investments offer compelling opportunities for secondary managers with strong platforms.

While potentially offering lower correlations, less volatility and attractive risk-adjusted returns over time, the inherent lack of liquidity that comes with private equity or credit funds elicits a common refrain when speaking to investors in these asset classes: How do we manage liquidity on our timetable? While some advantages can accrue from this inherent illiquidity – including the ability to invest through bull and bear cycles and to be patient when it comes to capital allocations – the long lifespans of most private markets funds means limited partners (“LPs”) are typically unable to exit ahead of schedule. This facet has always represented one of the largest challenges of the private markets asset class – and the funds that invest in it.

The secondary market addresses this challenge.

Open PDF for full article.

Source: Portfolio Advisors.