“The Cost of Liquidity“Opportunity cost—a simple idea from economics that many of us studied in school but that we naturally learned much earlier. It’s the concept of give and take. In choosing one option, you forgo another, and there’s an associated cost with that choice. This pervades every aspect of our lives and has for a long time.
The same principle exists and must constantly be evaluated in the world of investing. Giving up return for lower risk has been both a guiding principle and a common theme in building portfolios for decades. Similarly, when it comes to the private markets, a common theme that often dominates the conversation is the illiquidity premium—or giving up liquidity in exchange for higher return.
However, the flip side of the coin is much less talked about, yet arguably just as important. We believe that there is an associated premium in both the public and private markets—the difference is whether you are paying or receiving it. In this edition of Private Market Insights, we aim to demonstrate that liquidity comes at a cost, and that its role in the portfolio ought to be reimagined.“
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Private Market Insights – The Cost of Liquidity
ARES NEWSLETTER “The Cost of Liquidity“Opportunity cost—a simple idea from economics that many of us studied in school but that we naturally learned much earlier.
Mackenzie Stock
November 24, 2025
