A BNY Mellon white paper explores the retailization of alternatives in major markets. It also highlights possible solutions to allow retail investors to take advantage of alternative investments.
According to a press release, the 20-page white paper, titled "The Retailization of Private Markets in Alternatives," was released in January 2024. It found that private market assets have undergone repricing due to valuation and liquidity concerns. However, this could potentially lead to positive future returns. Additionally, some experts assert that portfolios containing alternatives could make markets less volatile and possibly enhance yield stability.
The press release states that the industry is eager to engage. For example, private market managers are seeking new opportunities for growth as benefit plans begin to decline.
Changes have already begun to affect major markets, according to the press release. There has been a shift in attitudes toward retail investment; in some markets, alternative asset managers are developing funds based on the European Union's SICAV (Société d'Investissement à Capital Variable) and ELTIF (European Long-Term Investment Fund) and the United Kingdom's LTAF (Long-Term Asset Fund).
The white paper concludes that some illiquidity is desired and needed, according to the press release. Retail investors and defined contribution (DC) plans prefer the daily liquidity characteristic of public asset markets. Illiquidity also contributes to alternative assets outperforming public markets.