5 Benefits of Semi-Liquid Alternative Funds

Semi-liquid alternative investment funds occupy the increasingly relevant middle ground between daily-liquid public markets and long-duration private vehicles. They promise access to private markets with some liquidity, a combination that appeals to advisors aiming to expand client exposure to alternatives without a decade-long lockup. Below are five core benefits that explain the growing momentum behind these structures:

1. Private Markets, Less Illiquidity

   Semi-liquid funds offer exposure to assets like private credit, real estate, and private equity without committing capital for seven to ten years. While they do not offer daily liquidity, most are structured to provide monthly or quarterly redemption windows. This balance gives investors access without fully surrendering flexibility.

2. Institutional Strategies in Retail Formats

   Semi-liquid funds often come from seasoned asset managers experienced in managing sophisticated strategies historically reserved for institutional investors. Packaged within vehicles regulated under frameworks like the Investment Company Act of 1940, semi-liquid alts can provide regulated access to sophisticated strategies within a structure compatible with wealth management platforms.

3. Portfolio Diversification Potential

   These funds often target asset classes with low correlation to public equities and bonds. Whether through floating-rate direct lending, core real estate, or discounted private equity secondaries, the exposure can help reduce portfolio volatility and enhance diversification.

4. Periodic Liquidity with Discipline

   Many semi-liquid funds cap redemptions to between 5% and 20% of NAV per quarter. This constraint allows fund managers to avoid forced selling during downturns and helps preserve long-term value. Investors benefit from access, but within a structure that prioritizes capital stability.

5. Transparency and Regulatory Oversight

   Although not as transparent as publicly traded ETFs, semi-liquid alternative funds operate under robust regulatory frameworks. Many are registered with the SEC under the Investment Company Act of 1940, mandating regular reporting, audited financial statements, and board governance. Such oversight provides greater transparency and investor protection compared to traditional private placements.

Final Thought: Semi-liquid funds are not for everyone. But for advisors seeking private market exposure with partial liquidity and institutional rigor, they can offer a well-designed alternative. Understanding how these structures balance access, control, and complexity is key to using them effectively.

Looking for structured, sponsor-independent research on semi-liquid alternatives? ALTIDAR offers clear, actionable insights built specifically for financial advisors.