British asset manager Schroders has launched a new specialist private equity fund designed for HNWIs and professional and qualified investors.
Its minimum investment of $50,000 sets it apart from larger private equity funds which would be out of the reach of many HNWIs.
The Schroder GAIA II Specialist Private Equity Fund is also semi-liquid, i.e. investors can choose when to redeem.
This will appeal to many HNWIs who might regularly rebalance their portfolios: Most private equity funds are closed-ended and have a fixed termination date.
“Investing in private equity has traditionally been out of reach of the vast majority of investors apart from big institutions,” said Rainer Ender, head of Private Equity at Schroder Adveq, which will manage the fund.
Wealthier UHNWIs with family offices have increased their investment in private equity, according to the recent Global Family Office Report 2019 by UBS. “Family offices continue to allocate sizeable shares of their portfolios to private equity”, the report said.
However, Schroders said it has seen an increased demand from HNWIs for access to private equity as well.
Wealth managers and private bankers around the world expect their clients to increase allocation towards private equity by 20% this year, according to the Knight Frank Wealth Report, published in March.
Preqin, a data provider for alternative investments, predicts private equity assets under management to top $4.9tn by 2023. That will put private equity on course to overtake hedge funds as the largest alternative asset in the next four years.
“The Schroder GAIA II Specialist Private Equity Fund will give a greater pool of investors access to this increasingly relevant asset class,” Ender said.
There is an early bird share class fee of 1.20% for professional investors and no performance fee for the fund, which will focus on small and medium-sized buyouts of companies with an enterprise value of less than $250 million in Europe and the US.
Companies of that size are typically not publically listed and are therefore not in the majority of investors’ portfolios, Schroders stated.