Investing in private markets can provide the potential for higher returns and diversification benefits, but also comes with longer investment horizons and less liquidity compared to public markets.
The lack of liquidity is one of the main characteristics of private market investments and it's important for investors to be aware of this and plan accordingly. Some private market investments have been structured to provide modest liquidity throughout the holding period, but the majority of private market investments have limited liquidity.
Private equity and venture capital funds investing in privately held companies typically have a lock-up period, which means that investors cannot sell their shares for a certain period of time, usually several years. This makes it difficult to liquidate these investments quickly.