Perpetual private equity vehicles are gaining traction, but what exactly are investors signing up for?
In this episode of The Wealth Enterprise Briefing, Michael Zeuner, managing partner, and Deputy CIO Matt Farrell explore the growing use of semi-liquid structures in private markets. These vehicles offer the promise of periodic liquidity without the long lockups of traditional drawdown funds. But behind that flexibility are important structural trade-offs and a need for clear alignment between investor expectations and manager terms.
Michael and Matt walk through what families need to know about how these vehicles function, where they may be appropriate and why “liquidity optionality” doesn’t always behave as advertised.
Key topics Michael and Matt discuss:
- Why these vehicles are gaining popularity and what problems they aim to solve
- The mechanics of quarterly redemption options, fund-level and investor-level gates
- Where asset-liability mismatches can create unintended risks
- Why private credit may be better suited to these terms than venture capital or real estate
- How subscription inflows and fee structures affect manager behavior
- What to ask about valuation methodology, capital deployment discipline and alignment
As they note, evaluating innovation in private markets means looking past surface-level features. The ability to redeem is only part of the picture. Investors also need to understand when, how and under what conditions liquidity is actually available.
If you’d like to discuss how these vehicles may or may not fit within your family’s portfolio, please don’t hesitate to contact us.
Important Information:
The Wealth Enterprise Briefing contains our current opinions and commentary, which are subject to change without notice. The Briefing is distributed for informational and educational purposes only and does not consider the specific investment objective, financial situation or particular needs of any recipient. Information contained herein has been obtained from sources we believe to be reliable, but we do not guarantee its completeness or accuracy. The information in the Briefing is not a recommendation of any security, and should not be relied upon as investment, legal or tax advice. Please consult with your investment, legal and tax advisors regarding any implications of the information presented in this presentation.
