Investors instinctively avoid less-liquid assets—often to their disadvantage. Adopting assets with less-than-daily liquid exposures provides a new domain for diversification, enhancing portfolio efficiency and improving risk-adjusted returns.
Semi-liquid vehicles such as non-traded business development companies (BDCs) typically experience less volatility than their publicly traded counterparts, reducing drawdowns and discouraging sentiment-driven selling.
Designing a liquidity budget that balances a client’s spending needs with their investment goals can allow for sensible and tolerable allocations to semi-liquid exposures.
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