In his recent article, Tom Stabile of FundFire Alts discusses the evolution of alternative investment products. Specifically, how access to alternatives has transformed from a niche market to a hotbed of product development. While alternatives are still commonly accessed through structures such as interval funds, tender offer funds, REITs, and BDCs, managers are increasingly differentiating their offerings into hybrid structures.
Leading the charge in the alts market are managers like Apollo, Partners Group, and KKR, introducing a surge of new products. These products aim to provide clients exposure to alternative strategies with periodic liquidity, filling the gap between traditional private funds and daily-traded mutual funds. While the focus has been on private credit and real estate, there’s been a recent expansion into private equity and infrastructure. Alts managers, including Blackstone and Ares, are diversifying, while traditional mutual fund players like BlackRock and PIMCO have entered the space.
The market, though small compared to the mutual fund and ETF markets, is gaining attention for future growth. Managers anticipate continued expansion in response to advisor demand. In her contribution to the article, Kimberly Flynn, Managing Director at XA Investments, notes that larger traditional and alts managers should be thinking about, “what does the market need and where are the market gaps. But some of them want a piece of each opportunity – it’s like manifest destiny.”
