A compelling investment strategy will not necessarily earn a place in an investor's portfolio.
For managers raising capital, particularly those building an early fund, that can be an uncomfortable lesson. A strategy may be differentiated and the return opportunity attractive, but investors are assessing it in the context of portfolios, liabilities and constraints that already exist.
For Shinobu Miyata, Head of Japan at Langham Hall, this is where what he terms “Spectrum Match” begins. In Japan, as across private markets globally, he argues that managers need to understand two spectrums: where an investor sits, and where the asset class sits. The opportunity lies in understanding where the two can align.
Investor depth is structural
As Shinobu puts it: “Investors exist on a spectrum defined by liabilities, purpose, and constraints.” An investor requiring liquidity and flexibility occupies a very different position from a pension fund or insurer investing against liabilities extending decades into the future. Other investors may be seeking more than financial return, placing value on strategic alignment, access to information or wider business relationships.
In Shinobu's framework, these differences are structural. Liability horizons, objectives and constraints determine an investor's “depth” and, in turn, what they need an investment to contribute to the wider portfolio.
Asset classes have depth too
For investors, public and private markets are not two separate worlds. They form a continuous spectrum, from liquid and transparent listed markets through to deeper private-market strategies.
Shinobu defines that depth principally through two characteristics: liquidity and information asymmetry. At the shallower end, information is widely available and capital can move relatively freely. Further down the spectrum, liquidity falls, capital is committed for longer and information becomes less evenly distributed.
This matters because the nature of the return opportunity changes too. In venture capital, growth equity, buyout and private credit, access, specialist knowledge and information can play a much greater role. In Shinobu's framework, information asymmetry is not simply a characteristic of these deeper markets; it can itself become a source of return.
Put the two spectrums side by side and the matching logic becomes clearer. Investors with long-term liabilities and institutional mandates, such as pension funds and insurers, sit deeper on the investor spectrum and may be better placed to allocate to less liquid, longer-duration assets. Investors requiring greater flexibility sit towards the shallower end. But the match is not always like for like: entrepreneurial and corporate investors may choose to go deeper where access, information or strategic value matters alongside financial return.
Finding the missing piece
This is where Shinobu's analogy of the investor's portfolio as a “shelf” becomes useful. As he writes: “The question is not ‘Is our strategy great?’ The question is: ‘Which depth of the investor’s shelf is missing a piece, and what kind of risk–return “spice” can we place there?’”
A decision not to allocate does not necessarily mean an investor considers a strategy unattractive. The strategy may simply offer the wrong combination of liquidity, risk, return or exposure for that investor at that point in time.
For managers, the task is to identify the risk–return profile that is missing from the investor's portfolio and be clear about where they have a genuine advantage: which stage or domain they understand, where information asymmetry exists and how they are equipped to exploit it.
Only then do questions of structure come in. Vehicle design, jurisdiction, governance and operations all matter, particularly where investors and managers operate across different markets. But those decisions should follow the investment and investor logic, rather than substitute for it.
Designing from the investor backwards
There is no universally “best” fund proposition in isolation. What works for one investor group, market or strategy may not translate neatly to another.
Understanding the investor is more than a fundraising exercise. It shapes the proposition itself. As Shinobu concludes, Spectrum Match is about “matching depth with depth, and designing for the exact context in which capital makes decisions.” A good strategy still matters. The harder question is whether it fills a gap the investor actually has.
This article draws on Shinobu Miyata's Spectrum Match analysis. Read the full article on Slow Steps Episode 7: Redesigning the Performance Standard: Slowsteps Inc.
