Broadening Access to Private Assets: Regulatory Wrappers Unwrapped
The number of regulatory wrappers is growing as access to private assets broadens. When presented with different options, there are a number of considerations to keep in mind.
Investing in private assets is an area of the asset management industry that continues to gather momentum from investors, managers, technology providers and regulators alike. This trend has been borne out of the increasing allocation from institutional clients, and more recently from the growing interest among wealth and defined contribution (DC) investors. At the end of 2020, total AUM for private markets stood at US$8 trillion.1 While this is largely held by institutional investors (91% for private equity), individual investor participation is anticipated to grow significantly in the coming years, driven by wealth, retail and DC investors.
While investors seek to understand and educate themselves on the merits of the different private asset classes available to them, regulators are trying to support this endeavor through the creation and evolution of different regulatory frameworks to improve accessibility to these asset classes while at the same time trying to mitigate the inherent liquidity challenges given the nature of private markets.
1. Source: BCG and i-Capital report. As of March 2022.