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Asset management groups are shifting their focus towards private funds, as they see potential for higher fees and returns. This trend is being driven by the largest players in the sector, such as BlackRock, Franklin Templeton, and Capital Group in the US, and Amundi, Legal and General, Janus Henderson, and Schroders in Europe. These firms are making bold acquisitions, forming partnerships with private capital groups, and developing new strategies to stay competitive in the market.
Private funds offer the potential for higher fees and returns, but they also come with new risks for clients. These investments are not traded on public markets, making their valuations subjective and difficult to understand. There are also limited standards for how these funds must value their assets, leading to varying levels of disclosure. Additionally, private funds offer limited liquidity, which can be a disadvantage for investors looking to sell their assets quickly.
Despite these risks, industry executives believe that individual investors will continue to seek out private assets. This has led to a trend of traditional asset managers trying to enter the alternative space. Some firms, like Franklin Templeton, have made acquisitions to expand their presence in private markets, while others are forming partnerships with alternative asset managers.
BlackRock, the world’s largest asset manager, has been particularly active in the private markets this year, with major acquisitions of Global Infrastructure Partners and HPS Investment Partners. Other firms, such as Franklin Templeton and T Rowe Price, have also made significant moves in this space.
Overall, the shift towards private funds is expected to continue as asset managers seek to diversify their offerings and attract clients with the potential for higher returns. However, it is important for investors to carefully consider the risks involved in these investments and to ensure that they have a clear understanding of the valuation and liquidity of their assets.