iCapital also found that there’s independent advisor demand for the niche its digital alternatives platform fills, as half of the study’s RIA and independent broker-dealer respondents complained that ease of access issues impacted their ability to allocate to private equity and hedge funds. Fewer than 10 percent of wirehouse respondents voiced similar complaints.
“This research shows that advisors recognize the potential benefits of investing in alternative asset classes,” said Lawrence Calcano, iCapital Network CEO, in a released comment. “However, the ability to access high quality alternative investments has historically varied widely based on the business model of an advisor. ... Our goal is to more broadly democratize alternative strategies and exposures for all high-net-worth advisors.”
RIAs were more likely to name diversification and unique investment opportunities as reasons to invest in private equity funds than advisors in other channels, according to iCapital, a difference that might be caused by their historically limited access to alternatives.
Private direct deals generated the most enthusiasm among the respondents, with 93 percent looking to maintain or increase their allocations over the next year. Enthusiasm for private equity funds was also high, with 87 percent planning to maintain or increase their allocations. Hedge funds were viewed less favorably, with 61 percent of the respondents planning to increase or maintain exposures.
For its report, iCapital surveyed 463 advisors during the second quarter of 2018, 99 percent of whom had been in business for at least 10 years and 60 percent of whom had more than 20 years of experience. Most of the advisors, 55 percent, had between $500 million and $750 million AUM, with 34 percent reporting AUM greater than $750 million and 11 percent reporting AUM less than $500 million.