Exploring Alternatives
Welcome to FundFire's weekly news brief, a roundup of recent key stories.
Traditional asset managers and wealth shops have been bulking up on alts expertise while those who have long been in the alternative space broaden out their base.
Janus Henderson last week inked an agreement with the National Bank of Kuwait Group's wealth unit that adds emerging markets private credit options, among other strategies, to the Denver-based shop's product roster.
The deal reflects CEO Ali Dibadj's effort to "buy, build or partner" the company's way into private markets, and the typically higher-margin products associated with them. Last year, Janus took a minority stake in Privacore, an alts distribution and consulting shop built by former AQR and Blackstone executives. That division is in the throes of its first product launch in partnership with a $200 billion manager, Dibadj said last week. Dibadj did not name the partner firm.
Franklin Templeton, meanwhile, is similarly seeking to extend the reach of its private markets business. In the past four months, the firm has hired a dozen staffers on its U.S. alternatives sales team, bringing the group to 50 overall. Franklin also named new heads of alts sales for the broker-dealer and registered investment advisor channels. Alternative strategies now account for about 16% of the company's $1.64 trillion in assets.
Retail distributors are bulking up, too. LPL Financial expects to add 20 to 25 alts strategies to its menu by year-end, according to Joanna Kanakis. Kanakis joined LPL earlier this year as head of the product manufacturer segment for the broker-dealer's financial institutions business. Advisors already have access to 40 alts products and 15 interval funds.
Offering a bigger alts menu is part of LPL's strategy to recruit more advisors to its 22,600-strong network. "The way to do that at scale is [for LPL] to enable larger and larger wealth management organizations," Kanakis said.
Rival Raymond James similarly sees private markets as the path to attracting more ultra-high-net worth clients – and the big advisors who serve them, executives said at the company's Elevate conference last week.
The ultra-wealthy may want alts exposure, but they don't want hedge funds, according to the leader of Tiger 21, a network of 1,400 ultra-wealthy investors who collectively represent about $160 billion in assets.
"Hedge funds are dead as a doornail," said the group's head, Michael Sonnenfeldt, last week.
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But green fields remain. Blue Owl says it may branch out beyond private equity financing to "adjacent" areas, such as infrastructure and securitized debt lending. Most recently, the firm acquired Prima Capital Advisors, a $10 billion real estate lender.
California-based Steelwave, meanwhile, is adding a new twist of its own to the market with a $500 million Bermuda-based commercial real estate fund that will let investors turn their stakes into digital tokens.
Video of the Week: Endowments in the Spotlight
As protests, arrests and commencement disruptions sweep college campuses across the country, FundFire talked to demonstrators calling on endowments to divest from holdings related to Israel in light of the war in Gaza. Demonstrators said they want to ratchet up pressure on schools to be transparent about endowment holdings as well as the funds and managers hired to help decide allocations.
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