Early redemption fees are the 'wrong solution' to semi-liquid fund gatings

Focus on sales pitches and education

Early exit fees are the “wrong solution” to the gating stories that have emerged from semi-liquid private markets funds, experts have said, while pointing to a better sales pitch and education as the potential answer.

Access to private markets has expanded in recent years thanks to semi-liquid or evergreen funds, products designed to appeal to the retail market by resolving some of the friction associated with standard private markets offerings.  However, at times of volatility semi-liquid funds have had to limit redemptions due to a surge in withdrawal requests, as was the case with the high-profile Blackstone $61bn Real Estate Income Trust in late 2022. Most semi-liquid funds feature redemption gates, which limit the amount investors are allowed to redeem in a given period so managers do not have...