First, illiquid investments
limit investors' ability to adjust their portfolios in response to early warnings of an increase in systemic risk.
Often, the individuals in the best financial position to assist the plan in ridding itself of the imprudent illiquid investment
couldn't do so because it would result in a prohibited transaction.
Assuming all other factors are equal, an illiquid investment
is inferior to and worth less than a liquid investment.
The importance of a clear exit strategy is central to an effective investment strategy today, so as to avoid the pitfalls of having a continuous illiquid investment
By making this offer, Beach is extending an opportunity for all Adelaide Energy shareholders to capture the underlying value of their investment ahead of significant funding requirements, as well as giving them an exit from what is an illiquid investment
that has never closed above its listing price of 20 cents.
Basic financial theory suggests that an illiquid investment
that is expected to pay regular dividends or distributions is worth more than an otherwise identical investment That has no expected distributions.
Further, a taxpayer who invests funds in speculative or illiquid assets has not exercised ordinary business care and prudence in providing for the payment of his tax liability unless, at the time of the investment, the remainder of the taxpayer's assets and estimated income will be sufficient to pay his tax or it can be reasonably foreseen that the speculative or illiquid investment
made by the taxpayer can be used (by sale or as security for a loan) to realize sufficient funds to satisfy the tax liability.
In a brief interview with CNBC following the SEC meeting, White said fund holdings in illiquid investment
would be capped at 15% of the portfolio, and while she said the SEC would provide "guidance" as to what holdings could be considered illiquid, the funds themselves would make the final determination.
Additionally, KIC funds part of its illiquid investment
portfolio with short-term deposits sourced from only a handful of names, including KIA and other cash-rich government-related entities.
But retail investors should realise that chasing a higher yield by investing in these products could mean winding up with an expensive, risky, complex and illiquid investment