Advanced investing

On the HL platform, some advanced investments (including LTAFs and Crypto ETNs) are available only to certain types of investors:

• Restricted investors who intend to invest less than 10% of their net assets – excluding your home (primary residence), your pension (or any pension withdrawals), and any rights under qualifying contracts of insurance

• Certified high-net-worth individuals with an annual income above £100,000, or net assets above £250,000 – excluding your home (primary residence), your pension (or any pension withdrawals), and any rights under qualifying contracts of insurance

You’ll need to complete an appropriateness questionnaire and demonstrate your knowledge and experience – particularly in relation to the risks, of the type of investment you’re looking to buy.

VCTs are excluded from the above requirements but should still be considered by only experienced investors.

Advanced investments carry risks including liquidity, financial loss, operational or market risks - So you should spread your investments and only commit money you can afford to lose.

This is especially true for private investments, which may include private debt (VCTs, LTAFs). They often involve complex structures and may lack transparency compared to public market investments. You should carefully evaluate the track record and strategy of the investment manager, as the performance of private debt heavily depends on the manager’s expertise.

The same caution applies to speculative investments like Crypto ETNs, which can be highly volatile. You should be prepared to lose all the money you invest, as these are considered high-risk.

Crypto ETNs track the performance of a cryptocurrency without requiring direct ownership. You own a note that tracks its price, and because the underlying cryptocurrency is securely held by a custodian, no wallet or keys are needed. Crypto ETNs trade like shares on the London Stock Exchange during market opening hours.

Private markets invest directly in privately held businesses, infrastructure projects, property developments, and private loans.

This can cover a range of sectors, geographies and businesses at various stages from a renewable energy start-up to a large-scale commercial real estate company.

Private assets are usually valued monthly, quarterly or annually, depending on the specific investment. This differs from public market investments where listed investments, like shares are valued daily.

Gains and income an individual receives from private market investments need to be declared according to HMRC rules.

Private assets can give you exposure to companies and opportunities you won't find in public markets — helping spread risk and improve the potential for better long-term returns.

But although they can help reduce overall volatility of a portfolio from the diversification they may add, private markets investments can themselves be highly volatile, so they should be considered carefully.

It all depends on the make-up of your portfolio. We recommend that high-risk private market investments don’t make up more than 10% of your overall portfolio.

Private markets are illiquid, meaning your money could be tied up for several years and may be difficult to sell. Make sure you’re comfortable with investing your money for long periods (5 years minimum) before participating.

Crypto ETNs are traded on exchange and are typically more liquid than private markets, but liquidity and pricing can be affected by market volatility.

Investment is usually made through specialist funds, partnerships, or vehicles run by asset managers. Some listed funds or platforms offer wider access, but most private market investments are available to only sophisticated or high-net-worth investors — and you’ll need to pass certain checks and requirements.

That said, regulatory changes are making private assets easier to access. New regulatory fund structures, like the European Long-Term Investment Fund (ELTIF) and the UK’s Long-Term Asset Fund (LTAF), are opening up private assets to private clients in certain markets.