As co-founder and owner of Blue Vault Partners, Stacy Chitty has spent more than a decade at the forefront of alternative investment research and transparency. Chitty also serves on the Connect Money Alternative Investments Advisory Board, where he brings a data-driven lens to industry conversations. With a front-row seat to the evolving landscape of non-traded REITs, BDCs, interval funds, and other alts, Chitty continues to champion better education, greater access, and smarter portfolio construction for advisors and their clients.  

In a recent Q&A, he offered insight into how Blue Vault’s mission has evolved, what trends and misconceptions persist in the industry, and why the next phase of growth must be built on integrity and advisor empowerment.  

CM: How has Blue Vault’s mission evolved over the years, particularly as the landscape for non-traded REITs, BDCs, and other alternative investments has changed?  

SC: It evolves every year. In fact, I’ve often said we must adapt every year. If we did not, we wouldn’t have made it this far. Things change constantly. I’ll give you one example. We started with alts data in 2009. By about 2015, we had to pivot, not so much away from data, but to other things to maintain a presence in the market. As we did, we never drifted from collecting and aggregating data, we just brought in new initiatives. However, the market has completely changed again, and we’ve pivoted hard to data again. 

CM: What do you see as the biggest misconception advisors have about alternative investments today? 

SC: Probably liquidity. So, to me it’s simple. No advisor should allocate a client’s portfolio too much or too far to alts/illiquid strategies. So, assuming that doesn’t happen, if a client needs cash, there’s no need to dip into or sweat 20%, or so, of the portfolio being illiquid. If a client needs emergency cash, they ought to be in a position to go get what they need. I also think it’s the advisor’s responsibility to manage the portfolio illiquidity daily/weekly, making sure that the illiquid allocation doesn’t get backwards. Good advisors always stay ahead of that balance. It’s when they get behind that things get tricky.  

CM: Blue Vault is known for its data-driven approach. How do you see the role of transparency and research evolving in the alternatives space?  

SC: Wow. Big question! With the attention on alts like never before, you have large firms focused on the space. They’re smart. They know how to take good data and make it useful for advisors. We’re talking with many of them now. They need our data. We’re fortunate in that we’ve been collecting performance data now since 2009. 15 years ago, very few people cared. That’s all changed. 

The point is that data solves lots of problems for the market — for the advisor. Advisors today have greater access to transparent performance data on public alts markets, predominantly through Blue Vault, and the research or analysis that results from that data brings greater clarity. It’s a win-win.  

CM: Are there one or two key trends you see in how advisors are using your data today versus, say, five years ago? 

SC: So, several years ago, for the advisor, it was all about assessing coverage of modified funds from operations (MFFO) and funds from operations (FFO) — metrics that help assess a fund’s ability to maintain distributions at current rates. I think today it goes beyond that. There are dozens of metrics to review which will help piece together the puzzle. 

One of the buzzwords today, not that it’s wrong, is asset class. Advisors seem to be really focused on this area. Asset class as in private equity, debt, or real estate. Those terms have been around a long time, but advisors seem to focus more there, and I think for good reason. But in the end, it’s really all about buying right, managing the portfolio professionally, and not paying more than you earn, which certainly has happened in the past. 

CM: What are the most important metrics or factors advisors should focus on when evaluating non-traded alts products? 

SC: So, I hinted at this in a previous question. But looking at 3-4 dozen metrics is needed to create a full picture. In the end, are the asset managers investing wisely and managing the portfolio wisely? If so, their distribution coverages should be healthy, and their management of risk should be evident in the data. 

CM: What gaps in advisor understanding still exist today? 

SC: I think there must be a point where the advisor commits to diving in and learning about alts fully: types, structures, benefits, and risks. Access also! Until they do that, they’re just on the edges, and they won’t develop enough confidence to really take those first steps and take advantage of all that alts have to offer them and their clients. 

Having said that, there are lots of websites to visit and read about alts and learn, but there’s no one place to go to learn it all. Not that there has to be just one place, but it seems no firm has mastered the educational side of alts yet. That’s understandable in some ways. The alts industry is still in its infancy. Strides need to be made more quickly at this point. 

CM: From your vantage point, what’s the most notable trend in the alternatives marketplace that RIAs and IBDs should be watching in the next 12–24 months? 

SC: I think it’s just the shear growth of offerings, structures, strategies. It can be overwhelming. You have public alts and private alts. You have a variety of structures and strategies. You still must do your due diligence on the sponsor. RIAs and IBDs should be anticipating alts adoption as a norm, not as an anomaly, and be hiring up front to provide the necessary resources to manage that growth. If they don’t, they’ll get left behind.  

CM: How have recent macroeconomic conditions — interest rates, inflation, and tighter credit — impacted fundraising and performance in non-traded alts? 

SC: Well, it’s really impacted the real estate market in a negative way. And it’s probably lasted a bit longer than most downturns of this type. On the flip side, it’s greatly helped the credit asset manager. But when it costs more money to finance a real estate transaction due to higher interest rates, that’s going to impact the return and impact the advisor’s decision to throw money to more real estate offerings. It will turn. I think we’re not far away. 

CM: Is there an under-the-radar trend or product structure that you think more advisors should pay attention to now? 

SC: No. I don’t see anything that points to some hidden gem. It really comes back to the basics. Advisors should be using alts for diversification. That means not just choosing one alt product type and using it, it means surveying the landscape and allocating to several alts strategies such as credit, real estate, and equity — in several forms — while always paying close attention to managing illiquidity. 

CM: What makes you most excited — and most concerned — about the next phase of growth for alternative investments? 

SC: I am really excited about the future of alts. There’s been a giant pivot. The allocation model is changing quickly at this point. This is not a fad — it’s here to stay. 

But the warning is also staring directly at us. With this opportunity comes the responsibility of doing it right, keeping the investor top of mind. In the end, it needs to be about them. That’s why I love the diversification argument. Who doesn’t want or need to be diversified? When we keep it simple, it’s a no-brainer. But like in any industry, some won’t do it right, and it will hurt investors and ultimately hurt us all. We must be committed to doing it right.