Clemens Reuter, global head of ETFs at UBS Asset Management, voiced concerns about the growing illiquidity of certain private market investment structures being made available to retail investors. While he acknowledged the potential for private markets to offer diversification and returns, he cautioned against products that misrepresent liquidity. This comes as a significant number of asset managers are expanding into private assets due to their higher fee potential compared to public market funds. UBS itself has seen substantial growth, with its ETF business exceeding $100 billion in assets globally, largely driven by inflows into sustainable products.
Reuter specifically highlighted the risks associated with semi-liquid ETFs or similar structures that offer limited redemption windows, contrasting them with traditional ETFs that allow intraday trading. He emphasized the importance of transparency regarding liquidity, especially for retail investors who may not fully grasp the implications of restricted redemption rights. His comments come amid a broader industry trend where firms like BlackRock, Amundi, and Legal & General are making significant moves into private markets, including acquisitions and new fund launches aimed at both institutional and retail clients.
This push into private assets has generated debate among industry experts, who question whether illiquid assets are suitable for structures that promise daily liquidity, such as ETFs. Some observers are skeptical about the ability of these funds to maintain liquidity, especially during market downturns. The concern is that limited redemption features, while intended to protect funds from forced asset sales, could leave retail investors unable to access their capital when needed. UBS has also faced scrutiny for its fee-sharing arrangements with private equity firms, raising questions about potential conflicts of interest when advising clients on these funds.
