Portfolio construction benefits
Beyond pricing, secondaries can strengthen portfolio design by improving diversification, smoothing cash flows, and shortening the road to liquidity.
Diversification: Even modest allocations can create broad exposure. “One transaction we are doing right now has 30+ underlying funds,” Jain noted. “Even a $100,000 investment is diversified across all of them. Different managers liquidate at different times, so the cash flows are smoother.”
Cash flow smoothing: Unlike primary commitments, which usually involve years of capital calls and delayed distributions, secondaries tend to reduce the “J-curve.” Jain said his team models liquidity timing carefully. “For smaller investors, the lockup is super important. We do not invest in things we think are going to take seven years. The deal we are doing now, we expect all of our capital to be back within two years.”
Liquidity timing: Because secondaries are purchased midstream, investors can see returns sooner than in primaries. That makes them easier to position with clients who want private exposure but resist decade-long commitments.
Transparency and risks
Invico also structures its approach differently. Instead of raising blind pools, the firm identifies opportunities first, completes diligence, then shares them with advisors and investors. “Whether they invest $100,000 or $5 million, they know exactly what they are buying,” Jain said. “It is harder to operate this way, but investors value transparency and control.”
