Fund flows – meaning sales of products – in March were “surprisingly resilient.”
As a variety of large brokerage firms, including LPL Financial, Charles Schwab & Edward Jones, revamp this year to give financial advisors easier access to sales of alternative investments, investment managers reported that March sales of these products were booming.
Money managers such as KKR & Co. Inc. and Blackstone Inc. have long targeted sophisticated institutional investors to sell high risk, high reward investments, from hedge funds to private real estate and credit deals. Over the past decade, such alternative investment managers have increasingly focused on getting their products on the platforms of firms that cater to retail financial advisors with wealthy clients who, on average, have little to no exposure to such assets.
InvestmentNews last year reported that sales of alternative investments climbed throughout 2024. This year has started off in the same manner.
Fund flows – meaning sales of products – in March were “surprisingly resilient,” with KKR, Blackstone and Ares Capital “seeing a material pickup” in March sales when compared to the previous month, wrote Steven Chubak, managing director of Wolfe Research and a leading brokerage analyst, in a research note this week.
“Private credit flows continue to reach new highs, with March representing the fourth straight month of record flows,” Chubak wrote. “And trends were also positive for nontraded [real estate investment trusts], where gross flows eclipsed $1 billion for the first time since March 2023.”
Beginning this week, Edward Jones will begin selling alternative investments, first to clients with $10 million or more in assets. Meanwhile, in April, Blackstone, Wellington Management and Vanguard said they are working together to build a platform that features private, alternative assets for retail investors. That translates into tens of thousands of financial advisors who will have more access to alternative investments to sell to clients.
Advisors sell and recommend alternative investments typically as vehicles that are not tied or correlated to the broad stock market, as well as a way to mitigate risk. Such investments also carry more risk and are designed for wealthier investors who can better stand those risks.
“I can’t say a lot about specifically what we’re going to do with Vanguard and Wellington, but the basic idea is to take two great world class leaders in liquid assets in both passive and active equities and fixed income and put that together with what we do in private assets and try to create holistic solutions for individual investors and expand the market in the process,” said Jon Gray, Blackstone’s president and chief operating officer, during a conference call with analysts last month.
“And again, the strength of the brand, the Blackstone name and what it enables us to do with various distributors and with financial advisors is really quite impressive,” Gray said. “I don’t think we’re going to comment on any specific platforms we may or may not be on. But I would just say in general, we continue to push out our distribution globally.”