SEC director calls for private markets to open up for retail investors

A top US investment industry regulator has called for pension savers to be granted greater access to private markets in a push that would ease the path for ordinary investors to increase their exposure to riskier strategies.

Dalia Blass, director of the Securities and Exchange Commission’s investment management division, said last week that main street investors had been left “on the outside looking in” because defined contribution pension plans did not provide access to private investments such as private equity, hedge funds and real estate.

“Private investments have the potential to provide stronger returns and diversification for investors, but come with both performance and liquidity risks,” Ms Blass said.

Target date funds and closed-end funds could provide convenient routes for pension savers to invest in private markets, she added.

Assets held in target date funds stood at $2.3tn at the end of 2019, according to Sway Research, a New Hampshire-based consultancy.

Vanguard, which is the largest provider of target date funds, agreed in February to form a strategic partnership with HarbourVest, a $68bn private market specialist, to provide access to private equity to qualified investors with a net worth of at least $1m.

Private equity managers have lobbied the US…

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