Skip to content

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.

To listen to this episode, or any previous episodes, please visit Alternative Allocations Podcast | Alternatives by FT. If you are enjoying this podcast, please take a moment 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.
     

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Investments in many alternative investment strategies are complex and speculative, entail significant risk and should not be considered a complete investment program. Depending on the product invested in, an investment in alternative strategies may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment. Diversification does not guarantee a profit or protect against a loss.

WF: 6525302

IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data.  Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

Franklin Templeton has environmental, social and governance (ESG) capabilities; however, not all strategies or products for a strategy consider “ESG” as part of their investment process.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.

Issued in the U.S. by Franklin Templeton, One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com. Investments are not FDIC insured; may lose value; and are not bank guaranteed.

You need Adobe Acrobat Reader to view and print PDF documents. Download a free version from Adobe's website.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.