Are illiquid assets the worst thing ever for savers?

They stopped you getting your money out of the Neil Woodford fund and those property funds – because the manager can’t sell them, right? And aren’t some complicated new rules[1] making sure these things are handled correctly?

Put like this, they sound pretty toxic.

But context is everything. And the chances are your pension scheme or insurance company can’t get enough illiquid assets, especially from private markets.

We don’t hear about this enough – and that’s a shame because if you tell stories about investment, like we do, then private assets are a gift.

They’re tangible. The building you work in, the train you caught to work, the hospital they’re rebuilding near your house. They’re much easier to see and touch than the shares and bonds people tell you to care about. They lend themselves to imaginative photography, infographics, virtual reality and other tools that make investing interesting and engaging.

They’re important. Businesses, transport and healthcare all need funding – and most of the renewable energy and other decarbonising projects we need are only investable through illiquid or private investing.

They’re reliable. I once launched the UK’s first social housing fund. It aimed to bring together pension schemes, desperate for income rising with inflation each year, and housing associations, who needed new finance to help them address the housing crisis. That was a pretty good match – and far more effective than rummaging around for solutions in the stock market.

They’re here to stay. The data say that appetite for private investments is high and rising. Ask any expert and they’ll say private investments usually offer better returns for the same risk, or less risk for the same returns, when compared to something similar listed on a public market. The problem most big government or insurance funds have is that they can’t get enough private or illiquid stuff.

That sounds a bit like the opposite of toxic to me.

It would be good to hear more about this because every investment comes with a tale – so let’s get the illiquid story out there in the right way, so savers are better engaged.

By the way, we could well be the best and most experienced private investment communications consultancy out there. So give us a call.

[1] https://www.fca.org.uk/news/press-releases/fca-confirms-new-rules-certain-open-ended-funds-investing-inherently-illiquid-assets