Attracting Retail Investors: A Guide for Fund Managers in a Defined Benefit Landscape | Private Equity International

Intertrust Group’s Edwin Chan, senior director, head of funds business development, UK, has written a guest post for Private Equity International (PEI) looking at how fund managers must court retail investors as defined benefit schemes wind down.

The article explores how disclosure, liquidity and operational challenges are among the issues GPs will need to address to tap into this new market. Defined benefit pension schemes have, historically, been mainstay institutional investors in alternative funds, explains Edwin.

Recently, however, these schemes are winding down as members pass on and their liabilities disappear, therefore, their investments in alternative funds, including private capital, are also diminishing.

Edwin highlights how the retail market offers a potential option and asks the question ‘what issues would this raise around marketing to investors who regulators regard as less sophisticated?’

The piece outlines the challenges retail investors must overcome to invest in private capital. Regulations and liquidity, assuaging investors’ fears and facing the operational tests are all emphasized challenges when it comes to retail investments.

Outsourcing could be seen to be more cost-effective and with moves towards opening private capital to retail investors, those that take the first move will see a major advantage in preparing for what lies ahead. Those that are among the first are likely to find that regulatory changes mean retail markets will become available to GPs.

You can read Edwin’s full article on Private Equity International, here.