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Unit Economics
Global Asset Management 2021: The $100 Trillion Machine

In a uniquely tumultuous year, assets under management worldwide showed strong overall growth, passing a major milestone along the way.

www.bcg.com  • shared by Hannah Dopico in #Measurement  •  almost 3 years ago

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MP
almost 3 years ago

Director @ Rotary Foundation

If the democratization of private markets is realized - which I doubt it would be, how many retail investors can really lock up capital for 10+ years anyhow? - I wonder, what this would do to potential returns expectations for these various asset classes. These segments of the investment world are already frothy and abundant with capital.

 
almost 3 years ago

Founder @ Mission Innovation Network

It is a true dilemma! On one hand it feels wrong to lock retail investors out of the the high-growth potential of the private markets, particularly since the public markets has been dramatically shrinking in relative size (# of companies primarily) compared to the private markets. On the other hand, the pros in the private markets are very good at what they do (are very well resourced, have network and info advantages, etc.), so having amateurs use their life savings to compete against that directly (they are not going to get access to the Blackstone or Sequoia main fund...) also seems like a bad idea. The "Regulation Crowdfunding" framework that the SEC recently came up with is actually quite sensible in terms of striking a balance between giving retail investors additional access to the private markets, while still offering some level of protection, so we don't go back to the early 1900's where immigrants were being sold the Brooklyn Bridge.
 
Hannah Dopico core team
almost 3 years ago

"Historically, private markets have been the purview of institutional investors such as sovereign wealth funds, pension plans, endowments, and foundations. These institutions have consistently increased their allocations to private markets in their search for yield. With interest rates likely to remain low for the foreseeable future, we see no signs of this force slowing down; in fact, many institutional investors report that they are below their target allocation for private assets. However, we believe the next big wave is likely to come from retail investors, who have largely remained on the sidelines as private markets have expanded. For a sense of the magnitude of this potential investor base, consider that US retail investors hold about 50% of total AuM across all public market asset classes but only 10% of AuM in private market asset classes. On average, retail investors currently have 1% to 5% of their overall portfolio allocation in private markets, whereas institutional investors have 10% to 15% allocated there. Even a small percentage increase in retail investor allocations could have a substantial impact." Private markets is now over $8 trillion in size. How much of it is it growth equity?