“If an individual investor decides they want to invest, they commit to this fund, their capital is fully drawn,” said Robinson, partner on Lexington’s secondary team in New York. “It gets invested quickly, and then at a point in the future when they want it, they can seek liquidity and get it. That is the real draw here is the more immediate nature of it, and the provision of liquidity at a time when someone needs it.”
The new fund allows Canadian advisors to access secondary markets in a fashion that has few restrictions compared to traditional drawdown funds, according to Dennis Tew. He says the fund aims to provide opportunity in secondary private equity, a diversified strategy that he says has largely been overlooked in Canadian markets.
“It’s a situation for Canadian advisors that haven’t done a lot of these drawdown type funds to start to move into that space on a measured pace,” said Tew, head of national sales at Franklin Templeton Canada. “And a lot of dealer head offices are far more comfortable with a structure like this versus a traditional drawdown fund where they put a lot of restrictions.”
Secondary markets offer investors a simpler tax reporting process than traditional drawdown funds according to Robinson, who adds that investors can access redemptions on a quarterly basis.
“This structure allows for capital to come in monthly and allows for redemptions on a quarterly basis,” he said. “So if an individual investor decides they want to invest, they commit to this fund, their capital is fully drawn.”