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Why use less liquid investments?

Some investments in property, private equity and hedge funds, as well as certain structured products, cannot be turned into cash quickly, and so they are considered as longer term or less liquid.

The need for investment liquidity is partly a myth. Portfolios do not need to be actively traded to achieve the desired goals. Most investors require some liquidity in their investment portfolios as a reserve against both foreseen and unforeseen commitments; however, very few need their entire portfolio to be in liquid or easily traded form.

Less liquid investments can diversify portfolio risks, and they are not necessarily more risky than publicly listed investments.

Less liquid investments can also offer the prospect of higher or defined returns. A lack of liquidity causes such investments to be less marketable than publicly traded ones, thus valuations at entry are relatively low. Exiting from such investments is normally at a time when demand for ownership has become more widespread, and thus at a higher valuation.

Risk Warning: You should note that there is a restricted market for non- readily realisable investments and it may be difficult to deal in these or to obtain reliable information about their value.


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GBIM, Gore Browne and Gore Browne Investment Management are trading styles of GBIM Limited which is authorised and regulated by the Financial Conduct Authority (FCA number 593265) and is a limited company registered in England (07746731). Registered and Head Office at Chequers Court, 37 Brown Street, Salisbury, Wiltshire, SP1 2AS

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