Private asset classes have long been a mainstay of institutional investor portfolios, but they have become increasingly accessible to individual investors. Hong Kong and Singapore, like many parts of the world, have also seen growing investor interest in these products, which provide access to less‑liquid asset classes such as private credit and private equity.
However, the reality is more complex than the “democratization” narrative suggests. Semiliquid structures must balance competing objectives: improved access versus elevated risk, managers’ drive for revenue versus appropriate fee structures, and investors’ demand for regular liquidity versus the illiquid nature of private assets.
Difference Between Traditional Open-Ended Funds and Semiliquid Funds
Investor Eligibility
In both Hong Kong and Singapore, private market products are the exclusive preserve of sophisticated investors. Investors must qualify as “Professional Investors” in Hong Kong or “Accredited Investors” in Singapore, with eligibility determined by portfolio size, net assets, income, or financial assets. Minimum investment amounts vary widely, from tens of thousands of US dollars through to several million US dollars, depending on the structure and strategy.
Common semiliquid structures in both markets include SICAV Part II funds and master‑feeder funds, including Cayman‑domiciled vehicles. These structures are typically open‑ended and evergreen in nature, offering periodic subscription and redemption windows rather than daily dealing. While they provide an access point to private assets, they remain subject to gated liquidity and capped repurchase terms.
Liquidity Management
Liquidity management sits at the heart of semiliquid fund design. While some vehicles hold cash or liquid assets to meet withdrawals request, most rely on periodic liquidity windows with advance notice requirements. Many semiliquid funds available in Hong Kong and Singapore limit redemptions to set intervals and cap the amount that can be withdrawn, often following conventions such as “2% per month, 5% per quarter, and 20% per year.” These limits are designed to protect remaining investors, but they also mean that full redemptions are not guaranteed. When limits are reached, investors may be subject to pro‑rated withdrawals.
Valuations
Valuation methodologies and frequencies are inextricably linked to the low liquidity typical of underlying assets. Valuation approaches tend to be subject to broad, non-structure-specific regulatory thresholds, while underlying assets often follow their own valuation cycles in line with manager governance and controls. From our observations in Hong Kong and Singapore, asset valuations are typically monthly for private credit assets, monthly or quarterly for private equity, and quarterly or half-yearly for real estate.
Fees
Fees are generally higher and more complex than those of traditional open‑ended funds, and investors should be mindful of this. In addition to management fees, semiliquid vehicles may charge incentive fees or carried interest subject to hurdles, high-water marks, and/or clawback provisions.
Key Takeaways
Semiliquid fund structures offer a pathway into private asset classes for sophisticated investors in Hong Kong and Singapore, but they demand careful consideration. Regardless of structure, underlying assets remain inherently illiquid, fees tend to be higher, and liquidity is conditional rather than assured. Investors must be prepared to hold these assets beyond the short term, with patience and a long‑term mindset.
To learn more about semiliquid fund structures across Asia‑Pacific and how approaches in Hong Kong and Singapore compare with other regional markets, please access our full report, Demystifying Semiliquid Fund Structures: An Asia‑Pacific Perspective.
