Hello, I’m Michael! It’s great to have you here at AGM, your go-to spot for conversations about private markets. I’m thrilled to introduce "AGM Alts Weekly," our newsletter where every Sunday, I delve into the latest happenings, trends, and clever insights around private market dynamics and innovation. This includes news articles, expert opinions, and a look at public alternative asset manager indexes. Plus, I share job opportunities in private market firms alongside recent podcasts and think pieces from Alt Goes Mainstream.
Stay in the loop and successfully maneuver through the fast-paced evolution in private markets by joining us. Let’s help you and your organization stay ahead of the curve!
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Greetings from London! I’ve been here for a week of engaging discussions, insightful presentations, and exhilarating interviews, not to mention podcasts. This week’s discussions have often focused on marketing and branding within large alternative asset management firms, which interestingly ties to wealth channel distribution. At a Citywire event, discussions with CMOs and Global Heads of Private Wealth Marketing centered on brand value and strategy, a topic gaining traction for visible reasons.
Merging brand-building with wealth channel relationships and introducing fitting products for individual investors, like various evergreen funds, aligns well with significant trends bolstering private market growth. These include adopting specific product structures to meet unique wealth channel demands and operational hurdles that alternative managers face.
Another hot topic was discussing private equity’s role in pension schemes, specifically around defined contribution plans. With evergreen funds making strides in innovation, it’s a pertinent discussion.
Two substantial announcements surfaced this week within the evergreen fund arena. iCapital is enhancing its Model Portfolio with the launch of the Growth Model Portfolio, while Fidelity International revealed plans to integrate private market assets through a Long-Term Asset Fund (LTAF) into its £16.9B FutureWise investment strategy aimed at UK workplace pension schemes.
FutureWise employs a “target date fund” (TDF) strategy, which channels members’ contributions into Fidelity International’s Diversified Private Assets LTAF upon its launch. Within the next three years, FutureWise intends to allocate about 15% of its portfolio towards private market assets using LTAF, resembling institutional investors’ allocations more closely.
Fidelity highlights that introducing these new investment avenues strives to "enhance diversification, improve risk-adjusted returns, and uplift member outcomes."
Stuart Warner, Fidelity International’s Global Head of Platform Solutions, emphasized the alignment between private markets and long-term pension objectives: “For our DC members whose investment horizon is measured in decades not years, we believe in the strong alignment with private markets investments.”
This principle is vital when recognizing the potential of private markets. John Burbank, Passport Capital Founder, endorsed this strategy on the Alt Goes Mainstream podcast: “Duration is the most important thing an investor can have.”
Taking a long-term approach—exercising patience—can significantly boost capital growth over time. The right structure is crucial for housing these assets. Despite regulatory and political challenges, retirement vehicles are conceptually suitable for private market placements where a long-term approach may benefit investors.
On another note, Rob Collins from Partners Group remarked on the distinction between managing an evergreen structure versus a closed-end fund on the Alt Goes Mainstream podcast: “An evergreen fund means an infinite responsibility.”
Emerging as they are, evergreen structures are carving out a space in private markets for investment exposure. While building reliable track records and adeptly managing evergreen funds might take time, they could soon find their place in retirement accounts.
The shift in retirement assets from defined benefit to defined contribution plans has shown secular growth over the past forty years. A figure from a June 2024 Reuters article demonstrates a notable transition of participants from defined benefit to defined contribution plans.
The pivot to defined contribution plans raises an essential question for sponsors, employers, and employees: will these plans provide sufficient retirement savings?
A report from the European Insurance and Occupational Pensions Authority claims not many do. In a Northern Trust paper citing this study, only 37% of employees without pensions feel assured about a comfortable retirement.
Retirement concerns are only growing amid current market trends. Given the rise in passive investing, private companies staying private longer, and questions around equity market returns, many pension assets face exposure limitations to a shrinking universe of company value creation.
A solution for pensioners? Tap into the value creation and diversification private markets offer.
Private market strategy implementation within certain retirement products isn’t entirely new. Partners Group, for example, has crafted tailored offerings for DC pension markets across the U.S., U.K., and Australia, accommodating the rigid purchase and redemption protocols of these systems while securing daily liquidities and pricing.
Collective Investment Trusts (CITs), regulated by the OCC for federally chartered banks or trust companies, offer another vehicle for private market ventures without SEC registration, touted as a cost-efficient option by firms like Wellington and State Street.
These CITs, with alternative investments, are gaining traction due to their alignment with institutional investment strategies, flexibility, and fees.
Despite complexities in structuring and managing private market funds for retirement plans, the reward could be appealing for fund managers and retirees alike. Analysis by Georgetown University’s Center for Retirement Initiatives found that back-testing returns from 2011-2020 with up to 10% private equity in DC target-date funds increased net returns by 22 basis points annually. Real assets in place of U.S. large caps and core bonds added an additional 11 basis points.
As evergreen fund growth and innovation in product offerings ensue, technological advancements are catching up to meet more demanding valuation frequencies compared to traditional closed-end fund vehicles.
Private market products are well-suited for retirement accounts, and innovations laid out by firms like BlackRock, Partners Group, and iCapital in evergreen funds and model portfolios could pave the way for integrating private market strategies in retirement schemes.
The movement just needs to expand further.
In more recent updates—AGM has established an index to monitor major publicly traded alternative asset managers, charting their influence on private markets perception and investor allocations.
Remember: AUM figures are calculated based on fee-paying AUM where applicable.
In other news, Partners Group has highlighted the attractive prospect of investing in mid-market infrastructure secondaries via LinkedIn, championed by Marc Meier and Melk Bucher, Ph.D., from the Infrastructure Partnership Investments team. Why is the mid-market so appealing? It’s the largest segment with the least competition among prospective buyers, yielding a notable pricing advantage compared to large-cap transactions. Their white paper on mid-market infrastructure secondaries can be reviewed here.
Moreover, Reach Capital’s "Infrastructure Equity Study 2024," reviewed by Preqin’s Will Bennett-Lynch, anticipates that European infrastructure fund AUM will reach 45% by 2026 from 31% in 2015. Regulatory amendments enhance Europe’s appeal, as evidenced by renewable energy’s growth, marking 23% of production, while recent legislative tweaks raise the 2030 renewable energy directive to 42.5%. Bennett-Lynch notes that private markets will be pivotal in bridging Europe’s $15T infrastructure funding requirement by 2040.
In the technological realm, Legal & General’s study forecasts a significant incline in sustainable mandates, anticipating these will constitute nearly half (45%) of UK institutional investors’ private market allocations within two years.
Switching gears to sports, Goldman Sachs’ report illustrates the monetization potential upon media rights due to demanding consumer preferences for live entertainment. This has propelled sports growth globally while creating promising investment prospects. The growing earnings opportunities range across sports betting, real estate, athlete brands, to media expansion. A significant surge in sports media engagement has occurred due to evolving streaming preferences, as evidenced by 93 of the top 100 most-watched channels broadcasting NFL games. Networks have placed premiums on live sports viewership, a motivator for heightened team valuations.
Despite a steady annualized valuation growth rate, media contracts have been pivotal in driving significant valuation enhancements.
Learn more about these trends.
The sports domain offers compelling investment prospects beyond the major leagues. Chris Long discusses the lucrative potential of buying into the NWSL’s Kansas City Current on the Alt Goes Mainstream podcast, drawing parallels to purchasing the Boston Celtics in the 1960s. With monopolistic content, recurrent revenue, and vast online/offline monetization prospects, sports present a diverse and untapped investment avenue.
Read my analysis on sports investment dynamics and why they are captivating institutional investors and HNW individuals.
Moving forward, bolstering the alt space requires attracting the best minds into the industry. Here are some current job opportunities in the private markets sector. Feel free to reach out for any introductions to these teams if appropriate, or if you’d like your open role featured here for our community:
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Blackstone (Alternative asset manager) – Private Wealth Solutions – Product Marketing, VP, EMEA. Learn more.
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Apollo (Alternative asset manager) – Distribution & Wealth Services Associate. Learn more.
- iCapital (Private markets infrastructure investment platform) – RIA, Family Office Business Development – VP. Learn more.
To the thriving community at Alt Goes Mainstream—let’s keep evolving by integrating abundant talent into the private market realms. For partnership Ventures, fill out the partnership form.
Recent thought-provoking podcasts and blog content on Alt Goes Mainstream include:
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Rana Yared from Balderton Capital – Discusses Europe’s potential to build globally transformative companies. Listen here.
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Alona Gornick from Churchill Asset Management by Nuveen – Shares insights on the power of private credit and the importance of permanent capital. Listen here.
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Bob Long from Stepstone Private Wealth – Talks evergreen structures in "What’s Your Edge.". Watch here.
- Ben Carlson from Ritholtz Wealth Management – Discusses sensible asset allocation and navigating private markets. Listen here.
Thank you for tuning into Alt Goes Mainstream. If you enjoyed this edition of Alts Weekly, kindly share it with friends, colleagues, and anyone interested in private markets. Feel free to subscribe below and follow me on LinkedIn or Twitter (@michaelsidgmore) for ongoing updates.
For any feedback, recommendations for articles, research, or guest suggestions for the Alt Goes Mainstream podcast, don’t hesitate to get in touch. I’d love to feature it in an upcoming edition or podcast.
A special shout-out to Michael Rutter and Nick Owens for their contributions to this newsletter.
