May 18, 2024

Specialist managers dominate private markets

Specialist managers dominate private markets

Specialist managers dominate private markets

Specialist managers excel in private markets, while diversified firms leverage strong brands to dominate retail alternatives. With rising competition, the landscape is shifting as firms expand product availability and outreach.

Specialist alternatives managers have long dominated their diversified, public-markets peers in the contest to raise funds from institutional investors for private market asset classes.

All the while, in retail, diversified managers have converted their strong brands and distribution breadth into ‘mindshare’ advantage in alternatives. The result: US retail advisers & gatekeepers indicate that six of the Top 10 retail alternatives firms are not pure-play alts managers.

While Blackstone and Cohen & Steers carry the top two positions, diversified asset managers make up six of the remaining Top 10, with public-markets giants Blackrock, GSAM and Fidelity hot on their heels, as well as Vanguard, JPM AM and Invesco.

Exhibit 1: Top 10 leading alterntives managers

%of US retail advisor/gatekeeper respondents, 2018 vs 2023

Furthermore, over the past five years, some of the biggest gains have been made by Fidelity and Vanguard, reflecting their expansive investments in brand, marketing and distribution. Presumably, these will prove difficult for specialist firms to match.

And yet single-year rankings seldom tell the whole story; there is a suggestion that the alternatives’ tide could be turning in US retail segments.

Enjoying growth in awareness at 1.5X that of their diversified rivals over the past five years, specialist alts firms are ratcheting the pressure. Expanded product availability (via wirehouses, but increasingly RIA firms too) and an accompanying hike in sales force hiring and outreach is having a definite impact.

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