New research highlights wealth manager interest in private assets

New research into the opportunities in private assets for wealth management clients has found there is significant interest amongst wealth managers to invest in private assets on behalf of clients, with 80% already doing so. This is seen as a way to bring greater diversification and return potential to their clients’ portfolios. There are barriers though, including operational and regulatory challenges and a lack of appropriate investment vehicles, that are standing in the way of greater allocations.

The research, conducted by the Investment Association and Goji, a provider of regulated platform technology, also focused on the new fund structures that would facilitate investment in private assets, including the new Long-Term Asset Fund (LTAF)*.

The research found that many wealth managers are already making small allocations to private assets, including private equity, real estate and infrastructure, as they seek to provide additional sources of diversification, enhanced performance, and an alternative source of income. There is also significant potential for further growth, as wealth managers are allocating on average only 5% of their total assets under management to private assets and see greater allocations in the future as a way to enhance client outcomes. The majority of wealth managers also believe demand from their clients for private assets will increase.

However, respondents noted a number of barriers to investing more in private assets, including the availability of appropriate fund vehicles; the regulatory barriers that prevent their sale to all but the most sophisticated and wealthy retail investors; and the higher costs involved with private asset investments. Unsurprisingly, the issue of liquidity expectations on the part of clients also featured strongly.

The LTAF was developed in part to address the lack of appropriate fund vehicles to invest in private assets. 71% of wealth managers surveyed had heard of the LTAF, and around one third said they were likely to invest in a fund such as the LTAF. Given that the fund structure was still being consulted on, and with no LTAF products being available at the time of the research, this is a higher level of awareness than expected. However, given concerns also expressed in the research about the limitations of distribution rules, it remains to be seen how the private wealth market will initially react to the LTAF. The FCA plans further consultation on LTAF distribution in due course.

Jonathan Lipkin, Director, Policy, Strategy and Research at the Investment Association, said: “This research clearly shows that wealth managers are keen to diversify their clients’ portfolios through greater access to private assets. While there are barriers to doing this, the new Long-Term Asset Fund could play an important part in starting to remove those constraints.

“A critical next step will be the evolution of distribution rules which currently remain fairly restrictive. As the first LTAFs come to market, and the FCA consults further, we hope to see more movement on distribution to allow private wealth clients and retail investors to fully benefit from this new fund structure.”

David Genn, CEO at Goji, said: “While the LTAF does not necessarily represent a silver bullet for advisors seeking access to private equity, for fund managers who haven’t yet tapped into the high-net-worth market, the LTAF structure could represent a compelling starting point to reach this audience.

“When coupled with innovations that streamline back-office operations and deliver efficiencies that enable distribution at scale, we believe the launch of the LTAF represents an important milestone, as private assets are increasingly made available to a wider and more diverse audience.”

Notes to Editors:

The report, Weaving Private Assets Into Wealth Portfolios: Evolving Structures to Meet Evolving Needs, can be found here. 

The results were collected via an online survey of Chief Investment Officers and Investment Directors at wealth management firms between July and September 2021. In total, 24 firms were represented, with over £270 billion of investment assets between them, thereby representing approximately one quarter of UK wealth management assets.

*The LTAF is a new UK authorised fund regime allowing wider access to assets including private equity, private credit, venture capital, infrastructure, real estate, forestry and collective investment vehicles that invest in private asset classes. It is an open-ended investment fund structure with a minimum notice period of 90 days and with dealing limited to a maximum of one trade per month, in order to address the liquidity mismatch that can arise from illiquid assets in open ended funds.

For further information, please contact:

Katie Martin, Head of Communications: [email protected]

T: +44 (0)20 7269 4655

Camilla Esmund, Communications Executive: [email protected]

T: +44 (0)20 7269 4625

IA press office: [email protected]

T: 020 7269 4696

About the Investment Association (IA):

  • The IA champions UK investment management, supporting British savers, investors and businesses. Our 270 members manage £9.4 trillion of assets and the investment management industry supports 114,000 jobs across the UK.
  • Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
  • Our purpose is to ensure investment managers are in the best possible position to:
    • Build people’s resilience to financial adversity
    • Help people achieve their financial aspirations
    • Enable people to maintain a decent standard of living as they grow older
    • Contribute to economic growth through the efficient allocation of capital.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
  • The UK is the second largest investment management centre in the world, after the US and manages over a third (37%) of all assets managed in Europe.

About Goji:

  • Goji is a leading provider of regulated platform technology to alternative investment managers. Goji’s mission is to make private asset investments more accessible to a wide range of investors. Goji’s investment platform gives investors an online journey and automates onboarding, payments, custody and reporting. Investors in Goji include AXA Strategic Ventures and Anthemis. Goji is headquartered in the UK and regulated by the FCA. For more information, please visit goji.investments