Liquidity risk is the biggest concern facing institutional investors when it comes to investing in private equity, although the majority are still supportive of the asset class, despite its stagnant performance in recent months.

These are the results of a study carried out by SEI, which gathered the opinions of senior investment professionals at 51 organisations ranging in size from less than €348 million to more than €13.9 billion in assets under management.

While 62 per cent of investors cited liquidity risk as a primary concern, 73 per cent still still see private equity as a viable source of potential return, while 69% acknowledge that the asset class offers diversification benefits. As a result, more than 90 per cent plan to either increase or maintain their private equity allocations.

In response to the results, SEI believes that those private equity managers who standardise and institutionalise their transparency practices will be most likely to retain and capture assets, because they will create efficiencies while delivering a more consistent and enhanced client experience.

Phil Masterson, managing director for SEI's Investment Manager Services division, commented: "..investors do have concerns - and these concerns aren't transitory, but rather represent an evolution in investor expectations. Investors are seeking transparency of holdings, valuation methodology and investment processes, as well as more comprehensive, timely and independent reporting. While managers may not need to provide the same level of transparency to all clients, they will need to instill best practices across their business in order to attract and retain institutional assets."

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