Australia playing catch up in alts investment market
Australia’s alternative investment market is set to enjoy further evolution and growth thanks to innovation overseas, predicts BlackRock and Franklin Templeton.
The democratisation of non-traditional assets beyond institutional players to retail and wholesale clients is a theme redefining the investment landscape – one that is occurring in “leaps and bounds”, said Franklin Templeton’s Felicity Walsh.
“We have been talking about alternatives, for those of us who have been around this space, for 10+ years extensively, and we’ve been particularly talking to our institutional clients about alternatives. The reality now is that there are a lot more options available to retail, wholesale, wealth investors in the alternatives space,” the firm’s managing director for Australia and New Zealand said at the Morningstar Investment Conference 2025 in Sydney.
“We are now at a time where this is now really coming on in leaps and bounds.”
With a plethora of new evergreen and semi-liquid private market strategies hitting the global market, Walsh expects this evolution to continue in the future, particularly as Australia looks to the US and Europe for inspiration.
“There’s more and more to come. The US is investing heavily into this space – clearly a much, much larger market than us. The investment that is going into technology, into platforms, and into the development of products and strategies is huge,” she said.
“We’re seeing that come to Australia. We are a little behind but I think if we look to larger markets, we can see how alternatives are being incorporated into individuals’ portfolios … It makes complete sense for alternatives to make up a resilient, robust portfolio. It absolutely should be available to all market participants.”
BlackRock’s Australian chief investment officer, Michael McCorry, said the democratisation of alternatives is a trend that “needs to happen”.
“We’re seeing the democratisation of so many investments, this is one that needs to happen,” he said at the Morningstar Investment Conference.
“Interval funds, evergreen funds, things that are providing periodic liquidity so people get some liquidity when they need it – [a] huge step forward. In the US and Europe, some really cool stuff is going on in those markets that we’re looking to bring down here. I agree, I think we’re a little behind in Australia, we’re playing catch up and bringing it to the wealth market.”
The CIO’s thoughts echo those of BlackRock’s chief executive, Larry Fink, who recently said that opening private markets up to a broader market is something the asset management giant is laser-focused on.
“BlackRock has always had a foot in private markets. But we’ve been – first and foremost – a traditional asset manager. That’s who we were at the start of 2024. But it’s not who we are anymore,” Fink said in a recent chairman’s letter.
The public-private market divide is an issue both BlackRock and other US participants are focused on solving, as global investment firms increasingly partner with alternative asset managers to launch hybrid investment solutions.
This is evident in BlackRock’s partnership with Partners Group, Blackstone and Vanguard, Apollo and State Street, as well as Capital Group and KKR most recently.
Fractional investing is another way retail investors are tapping into the alternatives universe over in the US, with Franklin Templeton’s Walsh predicting this trend could soon rattle the Australian market.
“In the US, they are now even fractionalising alternative funds. So giving access to what otherwise would have been extremely large assets that are available to the Aussie super [funds], like airports,” the managing director explained.
“These asset classes which still are not really on the horizon due to their scale are now being fractionalised and therefore much smaller, up to $50,000, investments can be made into these strategies.
“So again, giving access to a whole different set of drivers. That’s the next wave that’s also coming through.”
AUTHOR
Jasmine Siljic
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