Episode summary
Episode 37: The Illiquidity Premium: Lessons Learned from Institutions with Guest Wendy Li, Ivy I...
Alternative Allocations
· · Hosts: Tony Davidow · Guests: Wendy Li
Summary
Wendy Li argues that the biggest edge institutions have is not just access to alternatives, but the time, experience, and manager relationships they have built over decades. She says endowments and foundations learned to evaluate a wide range of private strategies, from private equity and venture to private credit and distressed debt, and to match those investments with long horizons and patient capital.
A central theme is the illiquidity premium. The host and Wendy Li both stress that investors should not expect daily liquidity and still capture the higher returns that come from private markets. Wendy Li says Ivy Invest was built to help individual investors access that premium through structures designed for longer holding periods, especially retirement assets that do not need constant liquidity.
They also discuss evergreen and interval-style funds as a more familiar way to access private markets, while warning that these vehicles remain long-term investments. Wendy Li highlights GP-led secondaries as a structural opportunity and sees stressed and distressed credit as another area to watch as markets remain vulnerable to dislocation.
Key takeaways
- Wendy Li says institutional investors have an edge because they have decades of experience, manager access, and a shared investment philosophy.
- The host argues that investors must give up some liquidity to capture the illiquidity premium and avoid stock-market-like returns.
- Wendy Li says evergreen structures make private markets mechanically easier to access, but they still require a long-term mindset.
- Wendy Li sees GP-led secondaries as a structural opportunity because capital and opportunity are mismatched.
- Wendy Li is also watching stressed and distressed credit for dislocations if market volatility persists.
Notable quotes
“we are a fintech investment platform bringing endowment style investing to everyday individual investors”
“there is a significant mismatch of capital versus opportunity”
“I think this is one of the premises behind why we built Ivy Invest”
“you have to be willing to allocate. And I always use the term patient capital”
“this is a long-term investment. This is not like my daily liquidity, mutual funds, and ETFs”
How the episode opens
This is Alternative Allocations by Franklin Templeton, a monthly podcast where we share practical, relatable advice and discuss new investment ideas with leaders in the field. Please subscribe on Apple, Spotify, or wherever you get your podcast to make sure you don't miss an episode. Here is your host, Tony Davidau.
Welcome to the latest episode of the Alternative Allocations podcast. I'm thrilled to be joined today by Wendy Lee from Ivy Invest. Wendy, you have a unique background.
Why don't you share maybe just a little bit of your background and what you're doing today.
Thank you so much, Tony, for having me on today. It's a real pleasure to be here. So, my background is as a traditional endowment and foundation institutional investor.
I have started my career at the Met Museum's investment office back in the mid 2000s. I spent roughly 17 and 1/2 years at various endowments foundations here in New York prior to founding my now business called Ivy Invest where we are a fintech investment platform bringing endowment style investing to everyday individual investors. We always love having people on who could kind of speak to lessons learned and again as you and I were talking about the endowments and foundations I think have really kind of led the evolution of allocating capital starting with David Swinsson all the way down to all of his disciples along the way.
So maybe if we can what are some of the lessons learned from institutions broadly and endowments and foundations specifically? It's interesting. David Sunson obviously has a very big presence over the way that endowments foundations broadly invest.
And when I was starting back in the mid 2000s, I would say there was a lot of the professionally managed investment offices across the endowment space, they were populated by former folks who worked in that Yale investment office, including the Metropolitan Museum's investment office.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- illiquidity premium
- evergreen fund structures
- gp-led secondaries
- distressed credit
- daily liquidity for advisors
Companies and tickers mentioned
- BEN
- Ivy Invest
- Franklin Templeton
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Alternative Allocations, this episode and its artwork belong to Franklin Templeton. Octagon is not affiliated with the show; this page is an independent summary.
