The range of investors seeking access to alternative market assets is expanding. In recent years, institutional investors, defined benefit pension plans and ultra-high-net-worth individuals have expanded their exposure to private equity, credit, debt and real estate. In parallel, retail investors have also become increasingly eager to participate in these asset types. Greater democratization of private equity, debt and other private markets offers compelling opportunities.
Three trends are propelling the current direction of travel:
However, retail investment in alternatives requires making accessible fund structures available. Such fund structures for alternative asset managers have emerged in Europe and the United States. These structures provide access to a range of alternative assets, including; private equity, infrastructure, credit and real estate. Regulatory changes in the European Union, United Kingdom and U.S. have created optimism for these structures to become more widely available via increasing issuance.
At the same time, these fund structures entail careful decision-making across five significant strategic questions:
1. What is the optimal structure for a given alternatives/asset manager?
2. How are investor liquidity requirements managed within illiquid asset classes?
3. What are the operational effort and cost implications?
4. What additional reporting requirements emerge for retail investors?
5. What are the appropriate fees depending on fund structure?
The following guides introduce the options available within Europe and the U.S.:
Alternative Onramps
Alternative managers must make the choice on whether to explore alternative fund structures and which options work for them. As a global financial services company, BNY leverages its robust enterprise to deliver value to alternative managers through each stage in the financial lifecycle and can help clients operate efficiently and effectively within their desired model.
To learn more about how the advancement of these fund structures by alternative asset managers are driving retail investment in alternative assets, please contact a BNY representative.
"Alternatives have been hard to access for retail investors and for many defined contribution plans, seemingly because appropriate investment paths for alternatives have been limited in number or simply been unavailable.”
BNY’s whitepaper explores the drivers of the democratization of alternatives and how the industry is responding.
