When affiliate title Private Equity International caught up with Jan Philipp Schmitz, Ardian’s head of investor relations, for February’s Democratisation of Private Equity Report, he said secondaries are a well-suited as a product for private wealth clients to invest in.

Why? Secondaries is not a blind pool, so investors know what they’re buying into. There’s also quick cashback, no J-curve and they’re typically well diversified.

The latest proponent of this notion is Coller Capital, which this week said it had launched a platform targeting high-net-worth investors with UBS veteran Jake Elmhirst at the helm. Elmhirst joined Coller last year after 25 years at the Swiss bank where he most recently led the private markets effort with UBS Wealth Management and was a founding member of its private funds group. You can read more about who’s joining him in Coller’s statement.

Elmhirst, naturally, is bullish on the notion that wealthy individual investors should have private markets in their portfolios.

“The thing that intrigued me about secondaries is it is probably the best suited private asset class for private wealth,” he told Secondaries Investor. “It’s highly diversified [and] a lot of the time you’re buying assets at a discount, so it’s very downside protected,” he said, adding that another advantage for high-net-worth investors who have never invested in private equity before will have the bonus of getting money to work quickly and getting cash back at a faster rate.

In terms of the opportunity, Coller estimates the private wealth market is around $85 trillion and that current high-net-worth commitments to private markets account for less than 4 percent of portfolios on average.

Elmhirst feels private wealth investors put too much of a premium on liquidity, but if the market can bridge that gap, and if investors can create really diversified portfolios, private markets should be a “core holding” in their portfolios.

Diversification and liquidity aside, secondaries’ real USP for individual investors is surely its ability to beat the J-curve, as institutional investors looking to gain exposure to private markets for the first time can attest to. Just last week, Arkansas Public Employees Retirement System staff approved moves to launch into private equity with a 5 percent target exposure of its total portfolio by the end of the decade. A whopping 75 percent of the capital will go to secondaries, and the pension cited the lack of J-curve as one of the strategy’s main attractions.

For a wealthy individual who hasn’t invested via private markets funds before and for whom seeing negative returns for the initial period of a closed-end fund’s life may be too much to stomach, this logic holds true too.

Elmhirst points out that a 1 percentage point average increase in private markets exposure within private wealth portfolios would be a hugely significant amount of capital. If secondaries can capture even a portion of that, it will be time to bring out the champagne and then some.

Write to the authors: madeleine.f@pei.group and adam.l@pei.group