How can you avoid a bad haircut?
Following the rise in gilt yields in the last year, many pension schemes have found that their % allocation to illiquid assets is larger than expected. To rebalance their allocations, or to better prepare for a buy-out, some schemes are exploring reducing their illiquid allocations.
Secondary illiquid sales usually gives rise to a word investors don’t like to hear… haircuts! ✂ Would schemes accept a haircut of 50%? Probably not. Would schemes accept a haircut of 0.01%? Maybe.
This begs the question – at which point does it make strategic sense to accept a haircut?
Investment Consultant Joseph Evans explains how we’re helping trustees set up frameworks that allow them to take the emotion out of these tricky decisions to assess the strategic trade-offs in a holistic way.
If you’d like to know more about how we can help you build an illiquid asset framework or help you select a secondary broker, please get in touch: joseph.evans@redington.co.uk.
