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Private equity and alternative firms move down market to support retail clients

Wed, 09/07/2014 - 06:11

Private equity and alternative firms are moving down market to support the retail marketplace, according to research from analytics firm Cerulli Associates.

"Private investment managers, following in the tracks of hedge-fund-focused alternative firms and traditional long-only managers, are tapping the public markets," says Michele Giuditta, associate director at Cerulli. "Delivering illiquid private investments to the retail marketplace is challenging, as the typical buyout fund on average has a lifecycle of approximately 10 years." 
Cerulli's latest annual report, Alternative Products and Strategies 2014: Identifying Opportunities in a Dynamic Investment Landscape, focuses on the US retail and institutional alternative product landscape, including distribution and product development trends. 
"Private equity managers entered the mutual fund space by offering hedge funds and long-only products, such as high-yield bonds, given their expertise in distressed investing," Giuditta says. "At the same time, these firms have been hard at work identifying ways to make illiquid private investments more mainstream and allow smaller investors into their funds." 
While these firms have raised a relatively small amount of total retail assets, Cerulli expects that as firms' product offerings expand, they will widen their appeal beyond institutional investors and grow their share of retail assets.

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