Institutional investors set to increase allocations to illiquid assets, MPG research reveals

By Newsdesk

April 03 2024
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A new study by international asset management company Managing Partners Group (MPG) has found that more than three-quarters (78%) of institutional investors and wealth managers plan to increase their allocations to illiquid assets over the next five years, with 10% expecting to make significant increases.

The survey, which included global institutional investors and wealth managers with €107 billion in assets under management, also revealed that 10% of respondents intend to reduce their allocations to illiquid assets over the next five years, while 11% will maintain their current allocations.

Current allocations to illiquid assets among the surveyed investors typically ranged between 11% and 25%, with 60% of respondents falling within this range. Approximately 16% of investors allocate between 25% and 50% of their portfolios to illiquid assets, while just under a quarter (24%) dedicate up to 10% to illiquids.

When asked about the additional premium required to invest in illiquid assets, a majority (51%) of investors indicated they need a 1.5% to 2% per annum premium. Nearly a fifth (18%) require a premium between 2% and 2.5% per year, while the same proportion seeks a 1% to 1.5% premium. Around 13% of respondents stated that an illiquidity premium of 0.5% to 1% per annum is necessary.

Jeremy Leach, Chief Executive Officer of Managing Partners Group, commented on the findings, saying, "Investors increasingly appreciate the long-term return potential from holding illiquid assets in their portfolio. Investing in Life Settlement funds, for example, which are life insurance policies that have been sold by the original owners at a discount to their fixed maturity value and are institutionally traded through a highly regulated secondary market, offer the opportunity for consistent outperformance as well as helping to diversify portfolios."

MPG's High Protection Fund, which invests in a portfolio of Life Settlements with an average Risk Rating of A+ from AM Best, delivered net annualised returns of 9.31% in 2023 and 219.72% since its launch in 2009. The fund attracted net inflows of $20 million last year and aims to achieve smooth, predictable investment returns of between 8% and 9% per annum, net of fees.

MPG is a multi-disciplined investment house that specialises in creating, managing, and administering regulated mutual funds and issuers of asset-backed securities for SMEs, financial institutions, and sophisticated investors. The company currently manages two funds with a combined gross value of $500 million.

Institutional investors set to increase allocations to illiquid assets, MPG research reveals

A new study by international asset management company Managing Partners Group (MPG) has found that more than three-quarters (78%) of institutional investors and wealth managers plan to increase their allocations to illiquid assets over the next five years, with 10% expecting to make significant increases.

The survey, which included global institutional investors and wealth managers with €107 billion in assets under management, also revealed that 10% of respondents intend to reduce their allocations to illiquid assets over the next five years, while 11% will maintain their current allocations.

Current allocations to illiquid assets among the surveyed investors typically ranged between 11% and 25%, with 60% of respondents falling within this range. Approximately 16% of investors allocate between 25% and 50% of their portfolios to illiquid assets, while just under a quarter (24%) dedicate up to 10% to illiquids.

When asked about the additional premium required to invest in illiquid assets, a majority (51%) of investors indicated they need a 1.5% to 2% per annum premium. Nearly a fifth (18%) require a premium between 2% and 2.5% per year, while the same proportion seeks a 1% to 1.5% premium. Around 13% of respondents stated that an illiquidity premium of 0.5% to 1% per annum is necessary.

Jeremy Leach, Chief Executive Officer of Managing Partners Group, commented on the findings, saying, "Investors increasingly appreciate the long-term return potential from holding illiquid assets in their portfolio. Investing in Life Settlement funds, for example, which are life insurance policies that have been sold by the original owners at a discount to their fixed maturity value and are institutionally traded through a highly regulated secondary market, offer the opportunity for consistent outperformance as well as helping to diversify portfolios."

MPG's High Protection Fund, which invests in a portfolio of Life Settlements with an average Risk Rating of A+ from AM Best, delivered net annualised returns of 9.31% in 2023 and 219.72% since its launch in 2009. The fund attracted net inflows of $20 million last year and aims to achieve smooth, predictable investment returns of between 8% and 9% per annum, net of fees.

MPG is a multi-disciplined investment house that specialises in creating, managing, and administering regulated mutual funds and issuers of asset-backed securities for SMEs, financial institutions, and sophisticated investors. The company currently manages two funds with a combined gross value of $500 million.

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