Capturing the liquidity premium--as an investor and as a business owner

Some of the top investment and wealth managers in North America joined together today for a session on asset allocation strategies for the future, sponsored by Wayne Cooper’s Wealth Management Exchange.  Lowell Yura, a senior asset allocation strategist at UBS Global Asset Management, told the crowd the blunt truth that “lower expectations for future returns” are now required.   Yura’s analysis favors higher returns from private capital, however, because “illiquid assets will capture the liquidity premium.”  His expectation, at least, is that the higher cost of capital for smaller private companies creates perhaps artificially lower values—and higher opportunities for investors.  “Investors need to tilt portfolios toward higher-returning assets,” Yura says, suggesting that illiquid assets like privately-owned businesses are currently undervalued.