IREI: Why liquidity and vehicle structure matter more than ever in private markets

By Greg Friedman - For institutional investors, one of the most underappreciated risks in private markets today sits at the intersection of liquidity, vehicle structure and governance. It is showing up not in asset quality alone, but in how liquidity promises interact with plan-level cash flows and decision-making.

For years, investors focused on yield and credit spreads, with credit quality also a primary driver of performance in private credit. Those factors still matter, but this cycle is revealing something more fundamental. Structure is no longer a secondary consideration. It is a core determinant of outcomes at the plan level.

Across many private-market portfolios, asset quality is not necessarily the primary source of stress for limited partners (LPs). In many portfolios, fundamentals remain intact, even as certain sectors face clear headwinds. The pressure is coming from a different place. It is coming from a growing mismatch between the liquidity investors expect and the liquidity the underlying assets can actually support.

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