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Laxman Pai, Opalesque Asia: The volume of alternative assets under management in the U.S. wealth management channels could rise to $3.03 trillion by 2029, revealed a study.
According to a new report from FUSE Research Network, the increase would represent a compound annual growth rate of 17% from today's AUM of $1.37 trillion.
"The advisor-oriented wealth management market is the next big frontier for alternatives, with asset managers tailoring hedge, private equity, private debt, and other strategies to appeal to high net worth and affluent investors," said the study.
FUSE forecasts such strong growth because the overall alternatives market is growing quickly, and wealth channels' share of alternatives - especially illiquid alternatives - will expand over the coming years.
While many alts for the wealth channel are still restricted to accredited investors, investment gains are increasing the numbers of investors meeting the $1M net worth minimum.
Meanwhile, traditional asset managers, from BlackRock and Franklin Templeton to Thornburg, have been promoting alts products for wealth channels to diversify into products with higher margins and lower turnover than mutual funds and ETFs.
Traditional firms will be able to leverage their expertise in marketing and selling to financial advisors to get a leg up on many alternative shops - beyond the few, such as Blackstone, KKR, and Apollo, that have robust advisor-oriented efforts.
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