Semi-liquid funds are set to open up access to alternative investments to retail investors, which could be a new stream of revenue for private credit firms, according to Deloitte.
In a new report, the Big Four audit firm said that a revitalisation of semi-liquid funds could be “a win for both traditional and alternative investment firms” and could help retail investors tap into private credit.
Read more: Slow uptake expected of private credit in UK ISAs
“For alternative investment firms, semi-liquid funds can offer new avenues of generating revenue in a challenging fundraising environment, where capital raised by private funds has declined every year since peaking in 2021,” it said.
“Retail investors have an opportunity to gain exposure to the growth of private companies through semi-liquid funds. A renewed focus on these funds can help make it more convenient for retail investors to tap into key asset classes such as private equity and private credit.”
However, it said that to effectively navigate the evolving retail alternatives market, investment firms will likely have to adapt their operating models.
Read more: UK investors turn to asset-based finance amid geopolitical tensions
“An updated operating model, designed to facilitate semi-liquid fund structures, has the potential to increase accessibility, enhance profit margins, and position early movers as leading providers of diversified solutions for the retail sector,” it said.
“Semi-liquid funds have the potential to become a preferred vehicle for democratising alternative assets, catering to retail investors who may seek exposure to private asset classes.
“Firms that establish effective guardrails for managing potential risks and build a brand in this evolving space will likely be better positioned to attract investor interest, growing assets under management in a high-margin asset class at scale.”
Read more: European securitised market offers compelling yields
