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 Paul Jodice, Co-Head of the Global Investment Manager Analysis (GIMA) team at Morgan Stanley. Morgan Stanley has one of the industry’s most robust platform with over US$250 billion in assets under management (as of September 2025). We discussed how Morgan Stanley’s platform has evolved to meet the needs of advisors and the types of strategies advisors are seeking.
We discussed the drivers of advisor adoption including product evolution to enhance ease of use and advisor education, amongst other areas. With respect to the current market environment, we discussed the recent volatility, stubborn inflation, the specter of slowing growth and the limitations of the 60/40 portfolio. I asked Paul what advisors are seeking from their alternative managers. He noted that advisors are trying to find “. . . incremental alpha in my portfolio, a differentiated yield and capture some element of enhanced diversification to the traditional markets.”
Given the versatile nature of alternative investments, I asked Paul about the importance of education. “Advisor education is critical to adoption of alternatives in the portfolio. You need to understand, when you think about alternatives in client portfolios, the industry allocations are typically in the mid-single digits.”
We discussed the different types of alternative education from foundational asset-class education to more advanced asset-allocation and portfolio-construction techniques. In addition to the guidance provided by headquarters, Paul noted the value in leveraging partners. “So we also work closely with a lot of our alternative investment partners for the research and education and leverage experience to help provide the insights. How does private credit work? What role does it play within a portfolio? How should it behave across various market regimes?”
Paul and I discussed the growth of model portfolios and how this may be a better path for some advisors, as it leverages someone else to allocate capital. This helps those advisors who struggle with portfolio construction. We also discussed product evolution and the growth of evergreen funds.
Lastly, I asked Paul about what themes they are focused on and what types of strategies they are looking to add and highlight in the coming years. He noted that, “Within our Alternative Investment Research Group, we put together annual themes that help in providing guidance of where we think the incremental opportunity is in portfolios today.”
Two themes and related ideas were infrastructure and secondaries. “Infrastructure is one of those themes, and we're seeing the great dynamics that are occurring with the need for power against the backdrop of AI. … Secondaries have been an area of focus within those alternative investment themes, because secondaries have become a liquidity provider in an otherwise illiquid market.”
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WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal.
Equity securities are subject to price fluctuation and possible loss of principal.
Investments in alternative strategies may be exposed to potentially significant fluctuations in value.
An investment in private market investments is suitable only for investors who can bear the risks associated with them (such as private credit and private equity) with potential limited liquidity. Shares will not be listed on a public exchange, and no secondary market is expected to develop.
Diversification does not guarantee a profit or protect against a loss.
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