Tech-Driven Platforms Address Challenges Associated with U.S. Alternative Investments

Tech-Driven Platforms Address Challenges Associated with U.S. Alternative Investments


October 2018, Boston. The October 2018 issue of The Cerulli Edge - U.S. Monthly Product Trends Edition analyzes mutual fund and exchange-traded fund (ETF) product trends as of September 2018. This issue also includes special coverage on alternative investments in the retail market, specifically the challenges and opportunities associated with delivering alternative investments through the interval fund wrapper.

Highlights from this research:  

  • The availability of tech-driven platforms, such as iCapital Network, CAIS, and Artivest, is easing access to alternative investments for high-end financial advisors. These platforms address many of the challenges associated with alternative investments, including due diligence and subscription agreements. The retail market has seen the entry of private equity giants, such as Blackstone, KKR, and Carlyle. The availability of brand-name private managers will help to fuel retail interest in alternatives.
  • Even though passive mutual funds gathered net inflows of $36.0 billion in 3Q 2018, total mutual fund net flows came in at -$14.2 billion due to active net outflows of $50.3 billion for the quarter. Mutual fund assets fell 0.6% in September to $15.3 billion. ETF assets surpassed $3.7 trillion in September, increasing 5.8% over the course of 3Q. The vehicle posted another robust month of net flows, adding $33.9 billion in September. This brings the total ETF net flows for 3Q to $89.3 billion.
  • Just more than half (51%) of advisors in a recent Cerulli survey report that they are very focused on portfolio diversification and access to uncorrelated asset classes. While liquid alternatives didn’t seem to be the answer for investors were looking for, interval funds may step in to fill the void. The timing for these products seems ideal both from a market perspective (i.e., perceiving the end of the U.S. equity market bull run, making it a better environment for alternatives) as well as an operational perspective (66% of managers in a recent Cerulli survey note that building out a new vehicle is a high priority within the firm).

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