UniFi by CAIA Crossing the Threshold - 11

BUILDING A NEW WORLD
The Democratization of Alternative Investments
Sandy Kaul, Senior Vice President,
Head of Industry Advisory Services
Franklin Templeton
The democratization of alternative investments has emerged as a pivotal force in reshaping
portfolios of individual asset owners. In just under twenty years, alternative investments
assets under management have quintupled, driven primarily by institutional allocations.
Moving forward, the role of the individual will be instrumental in the industry's growth.
Understanding the democratization of alternative investments is not merely a matter
of tracking numbers; it is about comprehending how this transformative trend disrupts
capital-raising norms, alters the corporate DNA, and fundamentally redefines who gets to
participate in the expansive scope of investment opportunities. The significance lies not
just in the figures but in the empowerment of investors, the evolution of market dynamics,
and the new frontiers of financial accessibility that signal innovation and change.
Growth in alternatives has been one of the defining trends of recent years. From 2005
through 2023, alternative investment assets under management (AUM) increased from
US$4 trillion to US$22 trillion, representing 15% of global AUM over that period.3
Further,
alternatives increased the amount that they contribute to global revenues from 31% to 50%
and represented US$193 billion of the industry's total US$386 billion global revenues.4
One impact of record growth in alternatives, particularly private equity, has been a change
in the capital raising pattern. Historically, most companies needed to access the public
markets to obtain the capital required to maintain their growth trajectory. With plentiful
money available to venture capital and private equity, that pattern has changed.
3 CAIA Association. Innovation Unleashed: The Rise of the Total Portfolio Approach
4 bcg-global-asset-management-2023-may-2023.pdf
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UniFi by CAIA Crossing the Threshold

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