Advisors Ramp Up Alts Allocations as Adoption Widens, Survey Finds

Alternative investments have moved firmly into the mainstream of advisor portfolios, according to a new survey that found 95% of respondents now use alternatives in client accounts. The study, published in From Public to Private: How Advisors Are Using Alternative Investments, suggests that adoption is being driven by both advisor demand and client interest as firms look beyond traditional stock-and-bond allocations.

The joint survey by CION Investments, YCharts and Compound Insights found that 61% of advisors use evergreen vehicles and interval funds across “many” client accounts, while 50% said they use liquid alternative ETFs. More than half of respondents, 52%, said they want to increase exposure to infrastructure and real assets, underscoring growing demand for differentiated sources of return and income. Interest in private equity and private credit also remained strong.

“For decades, many alternative investment strategies were largely reserved for institutional investors and the ultra-high-net-worth investor class,” said Michael A. Reisner, co-founder and co-CEO of CION Investments. “As access continues to expand, advisors have an opportunity, perhaps even a responsibility, to help clients understand the role these investments may play within a broader portfolio as well as the trade-offs that come with them.”

Advisors, however, remain sensitive to the practical challenges of implementation. Liquidity concerns were cited by 61% of respondents as the biggest barrier to broader use of alternatives, highlighting the need to match product structure with client time horizons and cash-flow needs. Callie Cox, chief strategist at Compound Insights and chief market strategist at Ritholtz Wealth Management, said the findings point to a balancing act between opportunity and practicality.

The report, based on responses from 301 registered investment advisors surveyed between April 7 and May 6, also includes six takeaways for advisors, including building a common language around alternatives, understanding the trade-offs and maintaining ongoing client communication.