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CONTRIBUTORS

Tony Davidow, CIMA®

Senior Alternatives Investment Strategist
Franklin Templeton Institute

In the latest episode of the Alternative Allocations podcast series, I sat down with Loren Fox, Director of Research at FUSE Research Network, to discuss the growth and evolution of alternative investments in the wealth channel. Loren shared proprietary research and his unique vantage point over the last couple of decades.

While there have been alternative products available in the wealth channel for decades, there has been growing demand for private markets over the last several years. Loren noted that, “as you've covered in previous episodes, and in your book, alternatives started really as the province of institutions and very-high-net-worth investors.” However, with product evolution, such as the increasing popularity of evergreen funds, that has been changing rapidly over the last several years. 

Loren discussed FUSE research showing that the average advisor is allocating 2%–5% to alternatives, with power users adopting them in a more meaningful way. We discussed the challenges for advisors from access to education to paperwork, along with the time commitment necessary to evaluate and invest in alternatives.

We discussed FUSE research on advisor adoption and the need for education. Loren noted that, “The one thing that we have found in surveying advisors is they all want education. At this point, advisors have the alternatives 101 content down pat.” He added, “Now they're looking for the next class. They're looking for more information about the details of diving further into the asset classes, the vehicle structures, and how to evaluate the various options.”

We also discussed the growth of alternatives in the wealth channel, which Loren estimated at approximately US$1.7 trillion in assets under management. “We expect that to grow to US$3 trillion by 2029, so a compound growth rate of 17% a year, which is a pretty high growth rate,” he said.1

Given Loren’s unique perspective, I was curious about what sort of trends FUSE was following, and which would have a lasting impact. He mentioned model portfolios, public/private blended portfolios, and private markets in retirement plans as areas to watch.

If you missed this episode, or any of the previous Alternative Allocation podcast episodes, don’t forget to subscribe wherever you get your podcasts. And remember to rate and review us. Your feedback helps us deliver more insightful episodes on alternative investments.

Endnotes

  1. There is no assurance that any estimate, forecast or projection will be realized.
     

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