By Tom Wiedecker
Earlier this month I had the privilege of participating on a panel discussion at the ICI Innovate conference. Titled “A Comprehensive View of Retail Alternative Investments,” the session brought together Tara Blackburn of Hamilton Lane, Michael Anderson of iCapital, and Mike Huisman of UMB Fund Services, and me.
Here, I’d like to briefly share a few key themes that especially resonated with those in the room.
1. The private market is huge.
Asset managers are seeing strong increasing demand for private investments by retail investors.
Fortunately, the market size is plenty large to accommodate strong demand. In the U.S., 87% of companies with annual revenues over $100 million are private. That figure is similar in Asia and even larger in Europe. Globally, some 140,000 private companies are in that category—compared to just 19,000 public companies. (Data courtesy of iCapital.)
2. Wealth managers expect to increase allocations to private assets.
Last year, Hamilton Lane survey data showed 70% of wealth managers anticipated higher portfolio allocations to private assets. The big challenge is accessibility for individual investors.
3. Technology is the key to overcoming operational challenges associated with retail-investor participation in private assets.
The big challenge is reducing friction in the alternative investment securities ecosystem. Workflow-oriented discussions ranged from straight-through processing and robotic automation to cloud-based solutions. These advancements are not only improving speed and accuracy but also enabling better data integration and analytics for informed decision-making. The panel also zeroed in on the promise of predictive analytics to help bolster operational resilience.
Many thanks to the panelists for a rich discussion about the challenges and the huge opportunities that lie ahead!