Dispatches from the asset owner front line: Putting a Premium on Liquidity

The growing number of investors gravitating to alternative investments and private markets recognise that one reason they may obtain higher returns is they have accepted reduced liquidity.

But, institutional asset owners who have registered for the European Pensions Symposium/European Investment Roundtable (29 September to 1 October, Copenhagen) are asking if they really are receiving a liquidity premium?

Investors need to examine precisely how large, how widespread, and how consistent that premium turns out to be.

In theory, of course, there has to be a liquidity premium in order to compensate investors for locking up their money. And historically many private markets and restricted investments have clearly delivered on that. 

But as investors flock to illiquid instruments and asset classes are they driving down and arbitraging away that premium? 

How well are they getting paid for tying up their money? And what if the answer is “It depends?” 

The debate about the liquidity premium has been growing more intense and, well, fluid. 

Hear the latest thinking about this important investment issue at Institutional Investor’s European Pensions Symposium/European Investment Roundtable to be held in Copenhagen on September 29 through October 1, 2021.