I agree that, if an investment like a timber farm does earn a genuine illiquidity premium, then low-DR investors should like it more than high-DR investors. I calculated under “Theoretical illiquidity premium” that low-DR investors should invest a few extra percentage points in illiquid investments (the exact number depending on parameters). A few percentage points is not that big a difference, so I’d consider it a low-priority change.
I don’t know much about timber farms, I know I’ve heard a few people recommend it as a diversifier and that it’s not popular outside of very wealthy investors. Seems plausible that it could be a differentially good investment for low-DR philanthropists.
Thanks for the Giglio et al. reference, I’ll take a look at that.
I agree that, if an investment like a timber farm does earn a genuine illiquidity premium, then low-DR investors should like it more than high-DR investors. I calculated under “Theoretical illiquidity premium” that low-DR investors should invest a few extra percentage points in illiquid investments (the exact number depending on parameters). A few percentage points is not that big a difference, so I’d consider it a low-priority change.
I don’t know much about timber farms, I know I’ve heard a few people recommend it as a diversifier and that it’s not popular outside of very wealthy investors. Seems plausible that it could be a differentially good investment for low-DR philanthropists.
Thanks for the Giglio et al. reference, I’ll take a look at that.