Fully 95% of advisors surveyed said they plan to maintain or even increase their exposure to alternative investments, a largely unregulated and illiquid asset class, over the next 12 months, according to iCapital. This comes despite a spate of disquieting news about departures from many alt funds.

Half of those surveyed reported that client interest in alts had increased over the past two years—and that interest wasn’t going away.

iCapital, the New York City-based technology platform that makes alternative investment markets more accessible to RIAs, broker-dealers, wealth managers and other advisors, surveyed 400 registered financial professionals in the U.S. who are currently using or considering using alternative investments.

Diversification was given as the top benefit of alternative investments, cited by 79% of those surveyed. But 52% of respondents also said that lack of liquidity and long lockup periods were the number one reasons that clients give for being unsure about using alts. High fees where the second most cited barrier to using alts, listed by 41% of respondents.

“We have seen a significant increase in appetite for alternative investments, but until relatively recently, a lack of access, understanding, and education was impeding advisors’ ability to put these assets in clients’ portfolios in a thoughtful manner,” said Lawrence Calcano, iCapital chairman and CEO, in the survey report. “I believe investors will come to see these assets not as alternative but as a core part of their allocation.”

Indeed, according to the report, the amount of capital invested in private markets has increased dramatically over the past decade, nearly tripling from $4.5 trillion in 2012 to $12.4 trillion by year-end 2022.

No doubt as alts have become more accessible for individual investors, they have grown in popularity.

As a group, alts include private equity, private debt, venture capital, hedge funds, managed futures, commodities, derivatives, real estate, and tangible assets such as antiques and art.

Across all alternative investment classes, the survey found that real estate was most popular, with 78% of respondents confirming that they had an allocation in real estate in their clients’ portfolios.

Private equity was the second most used, with 62% of respondents noting an allocation to private equity in their clients’ portfolios.

But among advisors with at least $500 million in AUM, more than 85% are currently invested in private equity, indicating wider use of these investments among advisors with higher AUM. It’s not clear why.

As for their plans for the next 12 months, 36% of respondents said they are likely to increase their allocation to private equity, and 34% said the same about private credit. Again, those numbers were higher among advisors with more than $500 million under management—46% of them said they are likely to increase exposure to private equity in the next year, and 54% of them said the same about private credit.

Besides affording greater diversity than regularly traded stocks and bonds, the advisors in the survey said they expect the asset class to outperform over the next year. Fully 60% said they anticipated private markets would beat their public counterparts in the next 12 months, while only 14% contended that private markets would underperform.

Despite all this bullishness, only a quarter of those surveyed said they feel “very knowledgeable” about alternative investments as an asset class. At the same time, 95% of respondents said they would be interested in learning more about alts.

Founded in 2013, iCapital supports some $163 billion in client assets and more than 94,000 financial professionals.