FUNDRAISING NEWS | November 23, 2024
A new report from KKR reveals a growing trend among RIAs to significantly increase allocations to private market investments as part of their strategy for portfolio diversification.
At the 2nd Annual KKR RIA Forum, industry leaders discussed the shift toward alternative assets, including private equity, private infrastructure, and other illiquid investments, driven by demand for higher returns and better risk-adjusted performance.
The report finds that 53% of RIAs plan to allocate more than 20% of their portfolios to private market assets in the near future. This marks a notable increase, as 36% of RIAs are currently making such allocations. Furthermore, the number of RIAs allocating little or nothing to private markets is expected to decline significantly, with nearly 50% of those previously investing minimally in private markets intending to increase their exposure in the next few years.
Private equity remains the primary focus, with 45% of RIAs prioritizing this asset class, while 32% are focusing on private infrastructure. The shift is indicative of a broader movement within wealth management to meet the growing demand from clients for more diversified and high-growth opportunities.
The report also highlights the platforms and investment vehicles RIAs are utilizing or plan to use to access private market investments, with the most significant interest shown in both evergreen funds and drawdown funds. 28% of RIAs are currently investing in evergreen funds, while 23% are investing in traditional drawdown funds. RIAs said they like the perpetual capital and liquidity characteristics evergreen funds provide, while avoiding the fundraising cycles and increased monitoring involved with traditional drawdown funds.
Third-party tech platforms are also a popular means of RIAs accessing private markets investments for their clients, with 22% of those surveyed saying they are currently using platforms like CAIS, iCapital, and KKR’s own private markets platform. Co-investment vehicles are also popular with RIAs, with 15% saying they utilize the vehicles to provide their clients with private markets exposures.
Source: https://www.kkr.com/insights/unlocking-future-of-portfolio-management-for-rias
