Secondaries are not a distinct asset class but an investment strategy. When an investor wishes to sell an ongoing investment, it becomes a Secondary. In this process, all outstanding commitments of the seller are also acquired. Secondaries are prevalent across various alternative investment sectors, including Private Equity, Private Debt, Infrastructure, and Real Estate.
Selling alternative investments can be challenging due to the inherently illiquid nature of the underlying assets, often resulting in discounts. The significant advantage of Secondaries lies in participating in existing funds, providing insight into specific investments and mitigating the J-curve effect. Consequently, Secondaries often generate returns from the outset. As an appealing addition to a primary portfolio, Secondaries offer the opportunity to shorten the J-curve effect.