How asset managers can shape their private markets offering
With US$1.5 trillion in private credit expected to be held by wealthy clients by 2029, a report has explored the best ways asset managers can take advantage of this trend.
Consultancy Oliver Wyman has explored how asset managers can best pivot their offering to distribute private markets to retail and wholesale clients.
The firm’s report How Private Credit is Reshaping Wealth Portfolios surveyed assets held by the seven-largest asset managers in the US and the proportion held by wealthy investors, as well as the future growth trajectory. These companies are Apollo, Ares, Blackstone, Blue Owl, Brookfield, Carlyle and KKR.
Shape of wealth market
The report found the proportion of private credit assets at these firms held by the wealthy have grown by 37 per cent per year for the last three years, one of the fastest-growing asset classes. They account for just under US$290 billion ($443 billion) of private credit assets held by the firms, representing 12 per cent of their total assets.
Wealth clients are defined as flows from the firm’s retail or wealth channels rather than institutional, although no dollar figure was specified.
The speed of growth from wealth clients is four times faster than assets gained from institutional clients, Oliver Wyman said, and around 30 per cent of the purchases by mass-affluent clients are coming from overseas, including Australia.
This speed of growth over the last three years is continuing apace, driven by measures taken by providers to make their funds palatable to the retail or wholesale market via structures such as evergreen funds, lower fees or minimum investment limits, tax considerations, and greater liquidity.
“Flows appear to be increasing rapidly. Inflows from wealthy investors rose almost 60 per cent year-on-year in the first quarter of 2025; our estimates suggest the vast majority of this was in private credit.
“Growth is so strong that some managers and distributors parked inflows earmarked for their evergreen funds in a queue or ‘holding pattern’ when subscriptions surged beyond a pace at which they could deploy capital appropriately while maintaining underwriting discipline.”
In the future, as much as US$1.5 trillion in private credit could be held by wealth clients by 2029, up from $400 billion currently and supported by greater adviser adoption. Private credit allocations are expected to increase from an average allocation of 0.3 per cent of a client portfolio today to 0.8 per cent in 2029.
How it is being used by advisers
Specifically, advisers and investment firms said private credit allocations could quadruple in the next five years. Having increased their understanding of the products and their intricacies, thanks to educational resources and support by business development teams (BDMs), these products are now being seen as attractive by advisers for diversification purposes as well as enhanced income.
“Individual investors – and the advisers who aid them – view private credit as an extension of a portfolio’s overall credit exposure, rather than as a distinctly separate alternatives allocation.
“Ageing Baby Boomers seeking retirement income are more concerned about creating steadier, higher yields than whether the instruments generating these cash flows are listed or unlisted. And evergreen funds appeal to those over 60 who might fret they could need access in the future.”
Separate research by iCapital found 71 per cent of wealth managers in Asia-Pacific are interested in allocating to private credit, up from 56 per cent globally. Over three-quarters expect evergreen funds to make up 10 per cent or more of client portfolios.
In a commentary, iCapital said: “It is wealth managers and investors who are now aware that compared to a traditional 60/40 portfolio, a 50/30/20 allocation to alternative investments can enhance a portfolio’s growth and income potential while at the same time improving its volatility profile.”
“Comfort with advice around private credit, ease in providing access to the right semi-liquid structures, and ample liquidity backstops will be powerful forces reshuffling winners and losers among advice providers, not just in the hyper-intermediated US marketplace but also worldwide,” the report stated.
Opportunities for asset managers
With this interest exhibited by the advisory market, it is no surprise that fund managers are actively pivoting their product ranges away from purely institutional and towards this second demographic.
In particular, the world’s largest asset manager BlackRock has completed multiple acquisitions in recent months in a bid to grow its private market capabilities. These include private markets research house Preqin in July 2024, Global Infrastructure Partners in October 2024, HPS Investment Partners in July 2025, and it has since announced it will be acquiring real estate investment firm ElmTree Funds.
A new Private Financing Solutions (PFS) business, led by HPS chief executive Scott Kapnick, will combine the firm’s private credit, GP and LP solutions, and private and liquid CLO businesses into one integrated platform. The core of this will be a US$190 billion integrated private credit franchise as well as a platform to deliver public and private income solutions.
Oliver Wyman noted that as firms seek to reach an alternative audience to their traditional base, this will require a different distribution strategy to their current methods, particularly a greater focus on fee pressure.
“Individual investors focus less on portfolio components than they do on outcomes (for example, retirement income). The wealth segment is highly intermediated, often by advisers with less experience explaining the role of private debt within portfolios. Individuals rightly or wrongly place less value on illiquidity, and more on lower fees,” the report said.
Therefore, initial gains are likely to be achieved by those managers who already work with both investor channels rather than institutional managers starting from scratch. Money Management previously covered how institutional providers typically underestimate the efforts needed to change tack, which require high cost and a long-term mindset.
Darren Connolly, chief marketing officer at InvestmentMarkets, said: “Asset managers are getting squeezed, but the intermediary market has always been hard to access. It takes time and can be costly, so firms need deep pockets.”
“Traditional asset managers have a distribution advantage their private markets peers often still lack. They already have invested in large wholesaling forces or client coverage organisations that support incumbent relationships with many advisers within large intermediaries,” said the Oliver Wyman report.
“Several offer model portfolios designed to guide advisers into specific portfolio solutions increasingly engineered not only around diversification but also achieving specific outcomes. And many traditional firms have well-established brand recognition with individual investors, a halo they can extend across new products.”
Private managers, on the other hand, are likely to be unaccustomed to the fee sensitivities of retail clients, particularly problematic for expensive private markets funds, nor have an existing relationship with fund platforms which are critical for distribution with a retail market space.
Retail funds also rely on ratings by research houses, which have already indicated they have their own concerns about the products regarding their track record and complex nature.
“To reach more individual investors, private market managers will need to explore creative ways to solve distribution challenges that avoid large-scale organic investments at heavy costs. They will use strategic partnerships to link themselves more tightly with existing distribution forces better able to reach and educate advisers and investors. They will embed their credit offers into broader holistic advice propositions such as other – or their own, potentially – model portfolios.”
Fixed income specialists
With advisers stating they view private credit as part of a fixed income exposure rather than an alternatives portion, this could be a benefit for specialist bond managers who can use this as an opportunity to expand their existing fund ranges.
Oliver Wyman suggested the future will see usage and development of “credit plus plus” funds which hold a higher proportion of investment grade assets or blended funds that mix public and private assets or hold higher volumes of private debt. Others will use a wider range of private debt types such as direct lending and asset-backed credit.
“These blended or integrated strategies let credit managers assess relative value across the full credit spectrum, and reduce the time required to trade between assets when opportunities arise. Asset-backed can offer shorter-duration funds, which can help with growing vehicles, too. They also provide a wide range of opportunities with a single subscription and incorporate enough listed securities to attract investors anxious about liquidity.
“Such products appeal to intermediaries seeking an array of credit products with attractive risk-adjusted return profiles.”
Morningstar previously flagged that fixed income managers are likely to be the only active managers to see inflows in the coming years as these types of funds are harder to replicate with passive competitors. In the second quarter of 2025, these were the only fund managers to report positive inflows during the three-month period, the research house said.
“Many fixed-income managers are already integrating their listed and unlisted credit desks, anticipating future product demand and development. These firms may also benefit from rapid client feedback loops through their strong distribution capabilities – supporting faster product development.”
Fund manager Janus Henderson is among those betting on this trend in fixed income and has secured US$400 million from life insurer Guardian Life to support future product development in this asset class. Janus currently has $143.6 billion in fixed income assets under management and saw inflows of US$5.6 billion to fixed income funds during the last quarter.
While it did not specify whether this would include private credit, the firm acquired a stake in private credit firm Victory Park Capital Advisors from Pacific Current in August 2024.
Concluding, the report stated: “Firms that focus efforts on their unique competitive advantages and successfully reach out to others as means of extending their capabilities are the ones likely to navigate and win outsized portions of one of the industry’s fastest-growing opportunities.”
AUTHOR
Laura Dew
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