Private markets are reshaping global wealth management as alternatives become a core part of portfolio allocations, according to research by GlobalData.
The report found that alternatives have shifted from niche offerings within wealth management portfolios to core allocations, including assets such as private equity, private credit, infrastructure and real assets.
The rise in allocations comes amid a changing market environment, with investors increasingly seeking diversification, resilience and long-term returns.
GlobalData stated that one of the other factors driving the shift towards alternatives is also the potential protection against volatility and inflation, including market disruption linked to geopolitical tensions such as the ongoing conflict between the US and Iran in the Middle East.
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“This shift reflects a changing market environment where traditional public equities and fixed income are no longer sufficient to meet client expectations for performance and resilience,” said Phoebe Hodgson, banking and payments analyst at GlobalData. “As a result, portfolios are becoming more institutional in nature, with a greater focus on long-term and less correlated sources of return. This benefits clients to be sure but also provides revenue for wealth managers less tied to the gyrations of the financial markets.”
According to the report, wealth managers are increasingly differentiating themselves by offering investment opportunities, including direct co-investments and niche thematic funds. Private markets have therefore played a central role in driving revenue growth, with clients seeking alternatives such as direct co-investments.
The report highlighted that wealth managers in both Europe and Asia have increased revenues from private markets. Products such as Lombard lending and private market feeder funds have increased wallet share while reinforcing recurring advisory fees, the report said.
In Singapore, banks including DBS have embedded alternatives and cross-border wealth solutions into advisory propositions for regional family offices, capitalising on rising Asian wealth and demand for global diversification.
“Overall, the rise of alternatives marks a structural transformation in wealth management,” Hodgson added. “As client demand continues to grow, private markets are set to play an increasingly important role in both portfolio construction and long-term growth strategies of wealth managers.”
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