An investment can have a convincing long-term case and still create difficulties if its owner needs cash before that case has developed. Property, private companies and infrastructure may produce value over many years, while the institutions holding them face expenses and commitments much sooner. Liquidity planning connects those different timetables, helping investors understand whether they can remain invested through a difficult period without selling assets under pressure.

Lord Jonathan Kestenbaum has argued for financing that gives innovative businesses time to develop. In a 2009 GrowthBusiness interview, he highlighted the difficulty of funding companies several years away from profitability. Anne Richards’s experience leading Fidelity International and James Anderson’s work developing Baillie Gifford’s Long Term Global Growth strategy and managing Scottish Mortgage provide other contexts for considering extended investment horizons. These examples raise a practical question: what arrangements allow capital to remain committed while a business develops, without leaving its investors unable to meet their own obligations?

The holding period and the payment calendar

A stated investment horizon describes an intention, but cash obligations arrive on specific dates. A pension scheme must make payments, a charity must fund its activities and a private-market investor may receive calls for previously committed capital. Before considering another long-term holding, an investment team needs to examine these obligations alongside the resources available to meet them. The relevant question is whether the portfolio can support its commitments while an investment takes longer than expected to mature.

This review should distinguish cash already available from money expected to arrive. Forecast distributions, planned asset sales and refinancing proceeds may all be reasonable assumptions, but their timing can change. Treating them as certain can make a portfolio look more flexible than it is. A practical payment calendar shows where an organisation depends on an event outside its control and where a delay would require another source of funding.

What can actually be sold

An asset’s valuation does not establish how quickly it can be converted into cash. A property may have a recent appraisal yet require months of negotiation, legal work and due diligence before a sale completes. A private-company holding may have an attractive reported value but few potential buyers. Even a listed security can become costly to sell when the position is large relative to normal trading activity.

Fund terms introduce another layer. Investors should understand notice periods, withdrawal windows and any contractual restrictions before counting a holding as an available cash source. The liquidity of the underlying assets and the investor’s ability to withdraw from the fund are related but separate matters. A portfolio review becomes more useful when it records both, rather than grouping everything under a broad category such as alternatives.

Investment structures and investor expectations

Richards’s experience leading a large asset manager and Anderson’s work with an investment trust offer different institutional contexts for this discussion. Asset managers must consider the terms offered by each fund alongside its holdings, while investment trusts have a different relationship between the portfolio and shareholders seeking to sell.

In a conventional investment trust, shareholders generally sell their shares through the market rather than asking the trust to redeem their investment. This can support longer holding periods within the portfolio, although the shares may trade below the value of the underlying assets. The structure changes how an investor obtains cash; it does not guarantee a favourable sale price or remove the trust’s own financing obligations. Understanding that distinction is part of assessing an investment before committing capital.

Testing several pressures together

Liquidity becomes harder to judge when each risk is considered separately. A fall in asset values may coincide with delayed distributions, reduced borrowing capacity and additional funding requests. An organisation that could manage any one of these developments might struggle if they occur together. Scenario analysis should therefore examine combinations that affect both the cash coming in and the payments going out.

Consider a hypothetical investor expecting a distribution from one private fund while preparing to meet a capital call from another. If the distribution is delayed, the call remains payable. Selling a listed holding may cover the difference, but doing so after a market decline could reduce flexibility elsewhere. Working through this sequence before it happens helps identify which reserves are dependable and which assumptions need closer attention.

Keeping the plan usable

A liquidity plan should be clear enough for someone outside the investment team to understand. It can identify expected payments, available reserves, assets that could be sold and the conditions under which borrowing would be considered. Responsibilities matter too: someone needs to update the calendar, check changes in fund terms and bring emerging gaps to the appropriate decision makers. A lengthy document has limited value if these tasks remain unassigned.

Richards’s asset-management experience brings the needs of different clients into the discussion, Anderson’s investment-trust experience illustrates a structure that can accommodate extended holding periods, and Jonathan Kestenbaum emphasised the importance of follow-on funding for developing businesses in the 2009 interview. For portfolio planning, these are distinct considerations: the investor’s cash needs, potential additional commitments and the structure through which assets are held. An initial investment may give a business its start, but later financing helps it continue developing before revenues can support its needs. Assessing those future commitments alongside the amount invested today makes the funding plan more realistic.

The purpose of liquidity planning is to make a long-term commitment workable. Investors need to understand how they would fund ordinary obligations and respond to delays before relying on future returns. A portfolio with a credible payment plan is better placed to give its investments time to develop, while retaining the ability to respond when circumstances change.