Talking Point  

Allocating private market assets in a multi-asset portfolio

  • Explain how private market assets can fit into a portfolio
  • Explain why liquidity is an important consideration
  • Describe the benefits of LTAFs
CPD
Approx.30min
Allocating private market assets in a multi-asset portfolio
Private markets are complex, global and straddle a vast array of different asset types
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In recent years, the investment landscape has seen a shift towards the 'democratisation' of private markets, giving retail investors access to previously exclusive asset classes.

These private assets, ranging from real estate and infrastructure to private equity and debt, have become more accessible through investment trusts and multi-asset funds, offering opportunities for diversification and potential inflation protection.

As long-term asset funds begin to establish a framework for private market investments in the UK, new channels are opening up for those seeking to diversify their portfolios beyond traditional equities and bonds.

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However, allocating private assets within a multi-asset portfolio is complex, requiring careful consideration of risk, liquidity, and returns. Retail investors face challenges in understanding these assets, with liquidity concerns and management fees influencing decisions.

Despite this, many large investors are optimistic, increasing their allocations to private assets for their potential to provide stable returns, even during market volatility.

As the regulatory landscape evolves, so too will the structures and accessibility of private market options, making it an intriguing area for advisers and investors alike to watch closely.

Ima Jackson-Obot is deputy features editor at FT Adviser

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Why might a multi-asset manager include private market assets in a portfolio, and what considerations must they balance?

  2. According to the article, why do evergreen structures benefit retail investors seeking access to private markets?

  3. What role can private credit play in a multi-asset portfolio, according to Schroders?

  4. According to the article, how does high-interest rates impact private infrastructure investments compared to private debt, and why?

  5. According to Lindsay James, why are LTAFs considered a potential solution for the liquidity issue in private markets, and what limitations might they still face?

  6. Based on the article, how might private market asset allocation vary, according to James Lowe?

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  • Explain how private market assets can fit into a portfolio
  • Explain why liquidity is an important consideration
  • Describe the benefits of LTAFs

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