The Future of “Traditional” Alternative Investments (Portage)

Summary

• Institutional investors such as pension funds and endowments allocated 23% and 32% of total assets to alternatives, respectively, while retail allocation remains in low single digits.p.3
• Blackstone estimates that mass affluent retail investors hold roughly $30 trillion in assets, while Macquarie estimates $42.6 trillion among households in the 90th to 99th wealth percentiles.p.4
• Alternative investment penetration is 3% for mass affluent investors, 22% for high-net-worth individuals, and 46% for ultra-high-net-worth investors.p.5
• Unlimited raised $8 million in Series A funding to replicate alternative asset index returns using machine learning.p.7
• Wealthsimple's private credit fund reached over $200 million in assets under management as of November 2023 following its launch with Sagard.p.9
• iCapital has completed 12 acquisitions to date to consolidate alternative distribution and asset offerings.p.10

Key insights

1. Retail investment allocation to private markets remains in low single digits despite high demand from alternative asset managers.p.3
2. Shifting individual investor allocations to alternatives from 1% to 5% could expand the addressable market by $9 trillion.p.4
3. Mass affluent investors require curated portfolios and educational tools, whereas high-net-worth investors prioritize product breadth and advisor support.p.5
4. Aggregation platforms enable lower minimum investments for high-net-worth individuals but create friction by requiring multiple platforms for non-alternative assets.p.6
5. Liquid alternative products provide accessibility and liquidity for mass affluent investors but suffer from fee opacity and potential gating risks.p.7
6. Platforms offering one-off fund campaigns face distribution hurdles because asset managers rarely commit to exclusive access partnerships.p.8
7. Consumer fintech incumbents can successfully leverage established brand trust to cross-sell alternative products as a one-stop solution.p.9
8. The high-net-worth alternative platform market displays winner-takes-most dynamics driven by technology integration and strategic acquisitions.p.10