Fund managers expect access to private markets in SIPPs to increase HNWI participation

Private market fund managers in the UK believe that self-invested personal pensions (SIPP) will play a major role in increasing high net worth individuals' (HNWI) participation in private markets, analysis from Wealth Club has shown.

The non-advised investment service for HNW and sophisticated investors conducted a study that found 85 per cent of private market fund managers felt greater access to private market investments in SIPPs would increase HNWI participation over the next five years.

Nearly a quarter (24 per cent) believed the impact on private market investment participation would be very positive.

Wealth Club noted that this optimism was already translating into product development.

Over three quarters (77 per cent) of private market fund managers said they were likely to develop products specifically for investors using SIPPs over the next five years, with just 3 per cent ruling it out entirely.

The study also highlighted growing support for other tax-efficient wrappers, with 74 per cent of fund managers stating they were likely to develop products suitable for ISAs over the next five years.

However, some respondents continued to cite the ‘unique’ regulatory framework in the UK as a barrier to adoption.

"The UK's SIPP market represents one of the biggest long-term growth opportunities for private markets,” said Wealth Club founder and CEO, Alex Davies.

“It's encouraging to see that fund managers clearly recognise that, with the overwhelming majority expecting SIPPs to play an increasingly important role in opening up private markets to sophisticated investors.

"For most individual investors, private markets have historically been largely out of reach. While investment trusts and other specialist vehicles have provided some access, many of the world's leading private equity, private credit and infrastructure managers were simply unavailable, while traditional private market funds often required very large minimum commitments and complex capital call structures.”

Davies argued that semi-liquid funds were changing this, as they were opening up access to a wider range of managers and strategies, while removing many of the practical barriers that had held investors back in the past.

“They also remove the discount and premium volatility associated with listed investment trusts, allowing investors to focus on the performance of the underlying assets,” he added.

"The combination of semi-liquid fund structures and SIPPs has the potential to transform access to private markets for sophisticated investors.

“As more managers launch suitable products, investors will have access to an increasingly broad range of institutional private market strategies within a tax-efficient pension wrapper."

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