A key trend Last Word Research has picked up over the last few months rise in sentiment and shift in fund flows towards less liquid strategies: private equity, private debt, infrastructure and property.
Last Word Research surveys hundreds of fund selectors across Europe every quarter.
The trend towards illiquids gathered momentum in Q4 2018 in the face of volatile equity and bond markets and Nordic fund selectors have shown a lot of interest in the strategies so far this year, according to Last Word Research.
Danish fund selectors, in particular, expressed positive sentiment towards private debt and infrastructure funds in Q1.
Leading fund selectors were also surveyed at Expert Investor’s event in Copenhagen on March 28.
One quarter of attendees (25%) described themselves as “already a well-established user” of illiquid strategies. A further 13% of attendees said they were “actively looking to put significant AUM into them”.
Meanwhile, 13% of attendees said they wanted to use illiquid strategies, but clients won’t let them.
The total assets under management in illiquids – private equity, private debt, infrastructure and property – is of course much smaller than the main asset classes, but fund flow data shows it is clearly growing.
There remains, however, further room for growth – 50% of attendees in Copenhagen said they were “not interested” in illiquids.
Private asset vehicles
Fund selectors in Copenhagen were also surveyed on what private asset vehicles they would be most comfortable with.
The multiple answer format meant they could list more than one type of private asset vehicle.
More than half of attendees (55%) said they would prefer an open-ended fund with less than daily liquidity. It was clearly the most popular type of private vehicle.
The next popular option was to be part of a consortium of investors – 45% of attendees said they would prefer this option.
The two next popular private asset vehicles were: a daily liquid open-ended fund (36%); and funds of funds (also 36%).
27% of Danish fund selector attendees, meanwhile, said they a direct deal with the manager; and 18% listed a closed-ended fund as a desired option.