Liquidity Research Update for 2022 and 2023 Events

This document is a research report that revisits liquidity research originally published in early 2022, focusing on the implications of increased investments in illiquid assets such as private equity and real estate. It outlines the significant market events of 2022 and 2023, analyzing their impact on liquidity and investor behavior. The report discusses the concept of a 'tipping point' where illiquid assets must be sold to meet cash needs, detailing how this affects both liquid and illiquid asset performance. It also highlights the fragility of the market, emphasizing that larger cash drains and illiquid allocations increase the likelihood of breaching this tipping point. The report presents key findings from the original research, evaluates the current liquidity landscape as of early 2024, and concludes with recommendations for investors. The findings are supported by data illustrating the relationship between market shocks and liquidity demands, as well as the historical performance of various asset classes during this period.