The Association of the Luxembourg Fund Industry (Alfi) is holding its Private Assets Conference 28-29 November 2023. Ahead of the event, Delano caught up with Veronica Aroutiunian, partner and member of Loyens & Loeff’s investment management practice group, who will moderate a panel called “Navigating the private wealth fundraising channels” on Tuesday 28 November, 14:55.
There has been a lot of chatter in the financial industry about the “democratisation of private markets” and retail investors. For you, what does this democratisation entail and what are the key points to keep in mind?
Veronica Aroutiunian: The democratisation of private markets refers to the trend of making investment opportunities traditionally reserved for institutional investors more accessible to retail investors. This shift is driven by the desire to provide a broader investor base with exposure to a diverse range of assets, including private equity, real estate, and other alternative investments.
Key points to consider include the importance of transparency in fund structures, the need for investor education to empower individuals in making informed decisions, and the responsibility of asset managers to navigate regulatory frameworks to ensure a fair and secure investment environment for retail participants.
What are some challenges or barriers that private asset managers may encounter when targeting new investors?
Veronica Aroutiunian: Private asset managers face several challenges when targeting new investors, particularly in the retail space. Regulatory complexity and compliance requirements can pose hurdles, as navigating these intricacies demands resources and expertise. Additionally, educating retail investors about the unique characteristics and risks of private asset funds is crucial.
Overcoming perception barriers and building trust in relatively illiquid and long-term investment products also presents a challenge. Striking the right balance between innovation and investor protection is essential for successful engagement with this new category of investors.
The panel you’re moderating will focus on private wealth fundraising channels. Without any spoilers, could you give us a sneak peek of the topics that will be discussed?
Veronica Aroutiunian: During the panel discussion, we will delve into the various structuring options available to asset managers seeking to pool retail investors into private asset funds. Points of attention from an operational perspective, such as tailoring products to different investor types, will be explored. The role of education in ensuring that distributors and financial advisors understand and effectively communicate the intricacies of fund products designed for retail investors will be a key focus.
We will also touch upon how collaboration between asset managers and investor services organisations, like Clearstream, ensures compliance with regulations, facilitating the responsible and successful offering of alternative private asset funds to retail investors.
Overall, the panel aims to provide valuable insights into the evolving landscape of private wealth fundraising and the dynamics between asset managers, distributors, and regulatory frameworks in this context.
Besides your own panel at the Alfi conference, which session are you most looking forward to hearing, and why?
Veronica Aroutiunian: I’m particularly looking forward to the “Liquidity Management Tools” panel [28 November at 16:25, editor’s note], which dives into the unpacking of LMT legislation and its impact on private asset managers. Understanding the theoretical foundations and practical implications of these tools is crucial in navigating the challenges of managing liquidity, especially when catering to retail investors.
This session directly connects with my own panel on private wealth fundraising channels, as the insights gained will enhance our understanding of the regulatory landscape and its influence on product design and investor communication. Attending both panels will provide a well-rounded perspective on the evolving dynamics of private asset management in the context of liquidity and retail investor engagement.