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Investing in private assets

Journalist: Ima Jackson-Obot, FTAdviser

ended 21. March 2023

Hello advisers, 

Do you invest in private assets on behalf of your clients? If not, why not?

If so, is it an asset type you see yourself increasing allocation over the next 12-18 months?

What is the main factor that dictates how you allocate part of a client’s portfolio to private assets? Attitude to risk, liquidity requirements, client's total assets or something else?

Thanks

Ima

2 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
We are driven by client requirements, but as part of a diversified portfolio, clients should have some of their assets in private equity. There are some great investment trusts out there that have generated good returns and are fundamentally run well.
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Philip Dragoumis
Director and Owner at Thera Wealth Management
Our client allocation to private assets is mostly tax-driven, e.g. VCT/EIS, and is only really for high net worth and reasonably sophisticated clients. Even then, we are in favour of heavy due diligence and significant diversification between providers and funds. We wouldn't tend to recommend these investments go beyond 10 % of investable net worth. For the majority of clients, especially now with the higher pension allowances, there should be no allocation to private assets. Private assets lack liquidity but more importantly transparency as we have found with many EIS and VCTs over the past year. As providers on the whole "mark their own homework", the valuations often are out of step with financial markets and reality. The tactic of hiding the real value of assets and hoping the storm will blow over will backfire at some point.