Liquidity Sleeve
A liquidity sleeve is the portion of a family office portfolio kept in liquid assets to meet obligations and manage risk.
Definition
Definition A liquidity sleeve is a dedicated allocation to highly liquid instruments—cash, short-duration fixed income, public ETFs, or other liquid strategies—designed to fund spending, taxes, opportunistic investments, and capital calls without forcing sales of illiquid assets. Allocator Context Family offices with large private allocations often maintain a liquidity sleeve to manage unpredictable timing of distributions and calls. Liquidity sleeves also act as stress buffers: when markets fall, they prevent forced liquidation of long-term assets. Decision Authority CIO and finance teams manage sleeve sizing based on spending policy, capital call schedule, and risk tolerance. Principals may set minimum liquidity comfort thresholds. Why It Matters for Fundraising The liquidity sleeve determines how much new illiquid capital can be committed. Managers who understand this avoid pushing oversized commitments that fail internal feasibility. Key Takeaways Enables commitments without forced selling Buffers capital calls and market stress Governs how much illiquidity is feasible A primary constraint on fund ticket size