We are of the opinion that private market investments have a return advantage over publicly traded securities. This is justified by the liquidity premium and the exploitation of market inefficiencies.

The bulk of the economy consists of private market investments, as the majority of companies (e.g. SMEs) are not traded on the stock exchange. The asset class therefore offers access to a wide range of alternative sources of risk and return. For example, companies in the start-up phase are not traded on a stock exchange and therefore have no way of becoming a part of a traditional portfolio. Venture funds make it possible to include such investments in an allocation. The synchronization (correlation) with public markets is reduced or even non-existent in many private market areas (e.g. litigation finance), as the pricing drivers are not or not primarily influenced by stock market prices. This, in turn, increases the stability of the portfolio as a whole.

As collective price finding mechanisms by a large number of market participants is non-existent for private market investments, prices are estimated either on request or on extended time intervals (quarterly, semi-annually). This valuation process prevents irrational and erratic price distortion affecting the portfolio value.