A quarter of investors are stuck with assets they want to sell but cannot easily get rid of, research shows.
Unlisted shares are the most commonly held of these “illiquid” assets, followed by debt investments such as loans. Other investors have holdings in digital currencies such as Bitcoin or investments in art, classic cars, motorcycles, boats or yachts.
These types of asset, unlike most shares and bonds, which can quickly and easily be exchanged on the open market, are typically difficult to trade. This is usually because the assets are not priced frequently and the pool of potential buyers is smaller or difficult to make contact with.
Jerald Solis of Experience Invest, the property investment firm that carried out the research, said: “It is surprisingly common to hear of investors who, several years into an investment, are unsure of exactly how they can get their money back out.
“Many investors get stuck with assets they cannot sell. Both they and the investment providers must be diligent in ensuring potential exit strategies are clearly explained.”
The research comes as the £3.7bn Woodford Equity Income fund remains in lockdown. Although a “liquid” investment, the fund was forced to suspend trading at the beginning of last month after customers left en masse and caused the illiquid portion of the fund to test the 10pc limit on such holdings.
Neil Woodford, the fund manager, is now tasked with reducing the unusually high level of illiquid stocks in the portfolio before the fund can reopen.
Brian Dennehy of Dennehy Weller, an advisory firm, said: “This is a big wake-up call to everyone that the problem of illiquidity stretches across all types of asset and all types of fund.”
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