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Alternative investments that move the needle for private wealth advisors

calendar_today May 31, 2024

Three areas that make all the difference for your private market allocations

Growth of alternative investments continues to build among private wealth investors. Historically out of reach for non-institutional clients, access and operational support via dedicated alternative investment platforms are changing private wealth in a big way.

Key drivers for successful private market allocations

Allocating to alternatives is an important step. But there’s far more to consider when diving into private markets than the asset class alone. We reveal three important considerations that make all the difference to your private asset portfolios.

1. Due Diligence

As alternative investments become more accessible, countless opportunities are now available for private wealth advisors and their clients. As such, proper due diligence is critical for strategies offered in your program.

A robust manager selection process typically begins with a broad initial mandate followed by manager calls and internal committee conversations and often includes independent, third-party diligence. This way, advisors have access to objective and institutional expertise.

You might be surprised that many private managers fail not because of performance, but instead due to operating inefficiencies and control breakdowns that come with the complexities of private market funds. Investment diligence is much more involved than diligence executed on public positions.

2. Diversification

A primary factor driving private wealth assets into alternatives is diversification from public markets. High valuations and concentration across many sectors and markets highlight the need for portfolio diversification. Ideal private market portfolios take diversification to the next level. Whether it’s across business size, industry, geography, or vintage, managers that bring various layers of diversification help ensure the most durable portfolios.

3. Differentiated ideas

It’s true, private wealth investors can now easily access alternatives, but finding the right fund is more challenging than you may think. Each year, thousands of funds raise capital, creating a potentially challenging environment for advisors to navigate. While brand-name, large-cap fund sponsors continue to attract attention, allocators should not overlook the opportunities for outperformance in small and mid-market funds. Smaller funds benefit from their agility, flexibility, and ability to exploit inefficiencies in under-covered markets.

Partners and platforms, like PPB’s Capital Market Solutions team, collaborate with family offices and private wealth advisors to source unique offerings that creatively address client portfolio needs. From the ground up, we listen and execute on your behalf to uncover new opportunities that solve private wealth challenges, presenting ideas in areas that are often new or untapped for our private wealth partners.

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