Private market fund managers forecast growth in semi-liquid fund launches

Private market fund managers in the UK are anticipating strong growth in semi-liquid private market fund launches as opportunities for public market growth “shrink”, according to Wealth Club.

The non-advised investment service for high net worth individuals (HNWI) conducted research that found 89 per cent of private market fund managers believed HNW and retail investors needed exposure to private markets.

This need to access investment growth opportunities was being driven by more companies staying private and lending increasingly moving out of traditional banking markets.

Private market fund managers expect demand to increase over the next five years, with 91 per cent agreeing that private markets will increasingly offer HNW and retail investors growth opportunities compared to public markets.

This potential demand is set to be met by a growing number of semi-liquid private market fund launches.

Nearly two thirds (62 per cent) of private market fund managers predicted a significant or dramatic increase in funds available to HNW and retail investors over the next three years, while 27 per cent anticipated a slight increase.

Over three quarters (77 per cent) said semi-liquid structures would be essential or very important to mainstream adoption of private market investing, while 21 per cent said they would be quite important.

Wealth Club founder and CEO, Alex Davies, said the growth of semi-liquid private market funds was one of the most important developments seen in the investment industry in many years.

“Fund managers clearly expect both demand and the number of available funds to increase significantly over the next few years,” Davies continued.

"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 largely unavailable, while traditional private market funds often required very large minimum commitments and complex capital call structures.

"Semi-liquid funds are changing that. They are opening up access to a much broader range of managers and strategies and removing many of the practical barriers that have 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.

"What is particularly striking is that the fund managers themselves believe these structures will be critical to the future growth of private markets.

“That tells you this is not a passing trend. Semi-liquid funds are becoming an increasingly important way for sophisticated investors to access private equity, private credit, infrastructure and real assets."

---