The Alternative Assets Space. The state of the market, its players and FAQ
Key points
- What is an alternative assets market?
- Who are the service providers in the alternative assets market?
- Who are the clients in alternative assets market?
- What are the outsourcing trends in Alternative assets space now?
- What do clients value from service providers and see as a commodity?
- How can managers and service providers create value and achieve their goals?
- How do you provide a competitive advantage to a client as a service provider?
- Which applications will give alternatives the edge in the future? What kind of technology will be seen in alternatives in the next years?
- To what extent can technology and AI specifically replace human expertise and advisory in 5 years?
- Is there a demand for high-frequency reporting?
- What are the examples of tech solutions replacing human manual work?
- Where do we see growth opportunities?
- Where can you find best practices in the alternative assets market?
- It is important to stay up-to-date on best practices and industry trends
What is an alternative assets market?
Who are the service providers in the alternative assets market?
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Asset managers:
Companies specializing in managing alternative asset portfolios, Including private equity firms, hedge funds, and real estate investment managers.
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Fund administrators:
Companies that support asset managers by performing tasks Such as accounting, valuation, and reporting.
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Custodians and prime brokers:
Companies that provide safekeeping and settlement Services for alternative asset investments. Technology providers: companies that provide software and technology Solutions to support the investment and management of alternative assets, such As portfolio management systems, trading platforms, and risk management Tools.
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Legal and regulatory advisors:
Lawyers and other professionals who provide Advice and guidance on the legal and regulatory aspects of alternative asset Investing. Consultants: companies that provide consulting services to help investors and Asset managers understand and navigate the alternative assets market, including Market research and due diligence.
Who are the clients in alternative assets market?
It is important to note that the alternative assets market is not accessible to all investors.
These types of investments often have high minimum investment requirements and may be less liquid and more complex than traditional investments.
Investors should carefully consider their investment goals and risk tolerance before investing in alternative assets and should work with a financial advisor with expertise in these types of investments.
According to the latest data provided by Preqin: key facts and numbers
- Global Private Capital Asset growth is expected to slow and reach $23Trn by 2027 with 9.3% annual growth rate.
- VC as an asset class will grow at 19%, 10% for PE and only 4% for Hedge Funds annual rate.
- AUM growth in North America will slow down and reach 11.4Trn by 2027, while Europe will make 4Trn.
- Global fundraising will be a key driver to a slowdown.
- Further dip in the performance is also expected, especially for PE.
- However, the investors are expected to maintain their allocations.
- Investors see the most opportunities in the US, UK, Europe and SE Asia, India and China.
What are the outsourcing trends in Alternative assets space now?
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Many existing Funds have outgrown their back office and require assistance in developing the infrastructure for outsourcing and outgrowth.
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Increased use of outsourcing for non-core activities such as back-office functions and middle-office operations.
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Greater demand for technology-enabled outsourcing solutions, including robo-advisory platforms and cloud-based solutions.
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A growing preference for specialized providers with niche expertise, such as environmental, social, and governance (ESG) investing.
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Greater focus on cost-effectiveness, risk management, and scalability, driving a shift towards outcome-based outsourcing arrangements.
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Increased regulatory scrutiny leading to greater due diligence and a need for enhanced governance and control of outsourcing arrangements.
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Overall, the trend towards outsourcing in fund management is driven by a need to remain competitive, reduce costs, and increase operational efficiencies.
The current conditions in the alternative asset could have a major effect on service providers’ interactions with their clients.
A few factors can have an impact on this:
- Increased competition: clients becoming more discerning and Demanding in their choice of providers.
- Market uncertainty: clients becoming more risk-averse and demanding Greater transparency and accountability from their service providers.
- Evolving regulatory landscape: providers may need to adapt to new Regulations and standards to maintain their clients’ trust and confidence.
- Changing client needs: service providers need to be responsive to these Changes and be able to offer tailored solutions that meet their client’s Evolving needs.
What do clients value from service providers and see as a commodity?
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1
Expertise and experience:
Service providers with deep understanding of the alternative assets market and a proven track record of delivering high-quality services.
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2
Reliability and transparency:
Providers who are reliable, transparent, and accountable in their operations and dealings with clients.
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3
Tailored solutions:
Service providers who can offer tailored solutions that meet their specific needs.
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4
Cost-effectiveness:
Service providers to offer cost- effective solutions that deliver the best results for their investments.
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5
Innovation and technology:
Providers using the latest technology and innovative solutions to help them achieve their investment goals.
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6
Strong relationships:
Solid and personal relationships with service providers and appreciate communicating with them effectively and efficiently.
How can managers and service providers create value and achieve their goals?
How do you provide a competitive advantage to a client as a service provider?
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Offer expertise and experience:
Deep understanding of the alternative assets market and a proven track record of delivering high-quality services.
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Provide value-added services:
This might include research and analysis, market intelligence, and custom solutions tailored to their specific needs.
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Foster strong relationships:
By fostering strong relationships with your clients, you can build trust and confidence and provide competitive advantage.
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Embrace technology and innovation:
By embracing technology and innovation, you can offer cutting-edge solutions that differentiate you from your competitors.
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Maintain high standards of reliability and transparency:
By maintaining high standards in these areas, you can demonstrate your commitment to your client’s success and provide a competitive advantage.
WHICH APPLICATIONS WILL GIVE ALTERNATIVES THE EDGE IN THE FUTURE?
WHAT KIND OF TECHNOLOGY WILL BE SEEN IN ALTERNATIVES IN THE NEXT YEARS?
Artificial Intelligence (AI) and Machine Learning (ML):
Allows automation of complex processes and the analysis of large amounts of data. Can identify patterns and trends, make predictions, and improve investment decision-making
Blockchain and distributed ledger technology:
Revolutionizes execution of transactions and record keeping. It offers greater security, transparency, and efficiency compared to traditional methods.
Cloud computing:
Allows for the centralization and standardization of data and the ability to access data from anywhere with an internet connection.
Data analytics and visualization:
Improves the analysis and interpretation of large amounts of data for more informed investment decisions.
Digital platforms and APIs:
Bring together seamless integration of different systems and sharing of data and information between asset managers and their clients.
To what extent can technology and AI specifically replace human expertise and advisory in 5 years?
Is there a demand for high-frequency reporting?
What are the examples of tech solutions replacing human manual work?
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Portfolio management and reporting:
automate the portfolio management process, the calculation of portfolio performance and risk metrics, the production of client reports
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Data management and analysis:
the collection, storage, and analysis of large amounts of data, reducing the need for manual data entry and analysis.
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automate the compliance and risk management process, monitoring investment activities, identifying potential compliance or risk issues.
automate the compliance and risk management process, monitoring investment activities, identifying potential compliance or risk issues.
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Trading and order execution:
automate the trading and order execution process, generate trade orders and the execution of trades in real time.
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Marketing and investor communication:
automate the marketing and investor communication process, produce marketing materials and distribution of information to investors.
Where do we see growth opportunities?
Where can you find best practices in the alternative assets market?
Consider looking at the following resources:
If your company participates in the alternative asset market, it is important to reevaluate your setup and systems
More reasons to Reassess your systems and setup: