At Harvey Morrison Private Wealth, we have for numerous years recognized the potential of illiquid assets to enhance portfolio diversification and reduce overall risk. Our approach looks beyond traditional equities and fixed income to incorporate private equity and private real estate into our clients’ portfolios.
With this in mind, we wanted to share a recent article from the CFA Institute which explores the question: Is Illiquidity a Blessing in Disguise for Some Investors?
In summary, the authors effectively challenge the conventional wisdom that illiquidity is inherently detrimental to investors, and should only be offered to institutional or ultra-high-net-worth individuals. By highlighting the behavioural finance pitfalls of liquid, speculative investments and the potential rewards of illiquid assets, they make a compelling case for reconsidering investment restrictions based solely on liquidity. While acknowledging the need for investor protection, the article emphasizes the importance of a refined approach that considers factors beyond liquidity, such as investor sophistication and risk tolerance.
