Self-invested personal pensions are poised to play a major role in expanding investor interest in private markets, according to Wealth Club.
Its study found that 85% of private market fund managers believe increasing access to private market investments through SIPPs will have a positive impact on investor participation over the next five years. Almost a quarter (24%) believe the impact will be very positive.
This is having a knock-on effect on product development, with 77% of private market fund managers likely to develop products specifically for investors using SIPPs over the next five years and just 3% ruling it out altogether.
It also found 74% of fund managers are likely to develop products suitable for ISAs over the next five years. However, some cited the UK’s “unique” regulatory framework as a barrier to adoption.
Alex Davies, founder and CEO of Wealth Club, said: “The UK’s SIPP market represents one of the biggest long-term growth opportunities for private markets. It’s encouraging to see that fund managers clearly recognise that, with the overwhelming majority expecting SIPPs to play an increasingly important role in opening up private markets to sophisticated investors.”
Davies said that for most individual investors, private markets have historically been largely out of reach. However, semi-liquid funds are changing that.
He continued: “They are opening up access to a much broader range of managers and strategies and removing many of the practical barriers that have held investors back in the past. They also remove the discount and premium volatility associated with listed investment trusts, allowing investors to focus on the performance of the underlying assets.
“The combination of semi-liquid fund structures and SIPPs has the potential to transform access to private markets for sophisticated investors. As more managers launch suitable products, investors will have access to an increasingly broad range of institutional private market strategies within a tax-efficient pension wrapper.”
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