Older investors need some illiquid assets, says fund manager

PRIVATE equity and other such illiquid investments are typically the preserve of the wealthy and sophisticated. But veteran fund manager Gerard Lee, chief executive of Lion Global Investors, believes such assets could help retail investors generate consistent, above-market returns - or alpha - over the long term. Says Mr Lee: "Most individuals invest in public markets - bonds and equities. Unfortunately the rate of returns from bonds is at a secular low. In Singapore, the clipping of coupons used to get you 4 to 5 per cent. Now it's 0 to 2 per cent.

"Institutional investors over the years have made a lot more money from private equity and real estate. Now, for retirees who are more sophisticated and educated, if you know how to make it accessible for them, they have the capacity to make the decision to invest. There is a need to democratise these illiquid investments for the individual.''

In real estate, Mr Lee believes there is the potential to create a fund that holds a portfolio of Singapore luxury residential property. But the stamp duties applicable today make such a fund untenable as it will require a higher rate of return.