FTFM Return? Performance? Never mind about that; it’s the liquidity, stupid. At least, it has been for most of the past year. Some of the more sophisticated institutions have even started to divide up their portfolios into liquid and illiquid portions, rather than by asset classes as has generally been the case in the past.
The trouble is, as an investment manager, providing liquidity in times of extreme stress can be punishing. In the private equity world, while many general and limited partners were able to hold on to their investors and their assets thanks to long lock-ups, listed private equity investment funds were subject to wholesale selling by distressed investors.
