The Global Expansion of Alternatives
Not much is certain in 2022 but we can safely bet that volatility in markets will persist. Interest rates are forecast to rise as inflation takes hold and geopolitical tensions weigh heavily on investor confidence.
Traditional asset classes such as equities and bonds are exposed to tightening monetary policy and inflationary fears. Yet investors are sitting on large pools of cash and are seeking opportunities.
While Australian investors still grapple to diversify, the global cries of TINA! (“There Is No Alternative!”) are beginning to fade away as alternative platforms, like Stropro, emerge as the potential winners in asset allocations.
Alternative investments include various investments outside of the worlds of stocks and bonds. The common suite of alternatives includes private equity, venture capital, hedge funds, private credit and property. However, alternatives can also be a bit more atypical, including goods such as Art and Trading cards and increasingly cryptocurrency and NFTs.
Over the last 10 years, the alternatives sector has experienced a significant expansion. Alternatives have proven adaptability, long-term resilience, and most importantly low correlation to traditional assets. In 2010, alternative assets under management (AUM) clocked in at $4.1 trillion globally; by 2021, this number had increased to $11.8 trillion.
Historically, investing in alternatives was reserved for ultra-high-net-worth’s and family offices; but recently, platforms like Stropro, have unlocked access. Providing our clients with access to a wide range of global issuers and fund managers.
FinTech platforms worldwide are driving the push into alternatives and Stropro is leading this charge Down Under. In 2020 we started by offering access to structured investments from the best global banks in the world. We processed over $43M and our income products are averaging 10.16% p.a.*.
As we kick off the new year, we are expanding our horizons with alternate fund managers launching on the platform this quarter.
We have been tracking other movers and shakers in the global alternatives ecosystem and in 2021 we saw some impressive capital raises across a range of local and global alternative platforms. Below we have outlined some of the notable platforms to keep your eye on this year.
In particular, New York has become an epicentre for emerging alternative platforms.
One of the most successful FinTechs to come out of New York is iCapital Network. iCapital was founded in 2013 to connect financial advisors and their HNW clients to alternative investment solutions. The end-to-end technology underpinning their success is used by banks and asset managers around the world to streamline and scale their private investments operational infrastructure. In 2021, the company raised $440M on +$4B valuation, an exceptional draft in the alternatives world.
CAIS is another leading digital platform that not only provides access to alternative investment funds and products but also offers educational opportunities for clients through their CAIS IQ function. The platform is reserved for financial advisors who bring with them a host of individual investors. In January 2022, CAIS raised an impressive $275M.
Congratulations to Tony Holt and the Square Peg Capital team for backing this great company.
Another notable New York company which provides access to alternative asset classes is Yieldstreet. In June 2021, they raised $100M. Among other private market investment opportunities, Yieldstreet is particularly interested in democratising access to art. Just last week they announced a partnership with Jean-Michel Basquiat’s family which will open access to an exhibition showcasing over 200 never-before-seen artworks by the Basquiat.
Simon is a FinTech company dedicated to financial advisors and asset management firms. With education and analytic capabilities built into their technology, clients have access to structured investments, annuities, and traditional & progressive alternatives. Last July, Simon raised $100M.
The final alternatives platform we want to mention coming out of Chicago is Halo. This team raised $100M in October 2021. Issuers sign up to the platform to connect with a larger index of financial advisors who are interested in diversifying their client’s investment portfolios.
In Australia, we have also seen some exciting movement in the alternatives platform space as other FinTechs are emerging to leverage these less traditional opportunities. Most notably iPartners and a new startup Reach Alternatives have been making waves.
Reach Alternatives is a brand new Sydney firm. While their digital platform isn’t live yet, they plan to offer access to global PE funds.
One of my favourite things about Alternatives is that they allow people to invest in their passions; people in our team are invested in surfing start ups, art and even sneakers. It’s great to see the global push for investors to move away from just stocks and bonds.
Stropro clients are currently gravitating towards capital preservation and income products and we have noticed increased demand for products that offer defined outcomes based on known risks.
Global interest for institutional-style investments has never been higher. As alternative investments become more accessible, the options are endless. Stropro has been preparing for this boom since our inception and we are dedicated to providing a new wave of investors with an exciting and endless stream of investments.
By Abraham Robertson and Holly Brooks
*past performance is not indicative of future performance
This article has been prepared by Abraham Robertson. Abraham Robertson is a founder of Stropro Operations Pty Ltd (ABN 28 633 603 399) (Stropro). This article is for educational purposes and is not a substitute for professional and tailored financial advice. This article expresses the views of the author(s) at a point in time, which may change in the future with no obligation on Stropro or the author to publicly update these views. This article uses information from sources the author considers to be reliable but does not represent that such information is accurate or complete, or that it should be relied upon. Past performance is not a reliable indicator of future performance. Investments may rise and fall in value and returns cannot be guaranteed. Stropro makes no representations or warranties, express or implied, as to the accuracy or completeness of the information it provides. Stropro Operations Pty Ltd (ABN 28 633 603 399) is a Corporate Authorised Representative (CAR №1293257) of Stropro Compliance Pty Ltd (ABN 74 640 214 740, AFSL №533443).