Alternative assets, or those assets excluding bonds, cash and equities, are garnering more attention due in part to the current low-yield environment.
Additionally, advisors have more avenues for presenting alternatives to a broader swath of clients. The asset class was once off limits to all but professional and accredited investors, but these days, thanks to novel fund structures and other avenues, alternatives are available to a large client base and that's a plus for advisors because alternatives encompass some compelling asset classes.
Those include well-known concepts, such as infrastructure, natural resources and real estate as well as more complex sometimes opaque fare such as hedge funds, private debt, private equity and venture capital.
“Alternative assets typically refer to investments that fall outside of the traditional asset classes commonly accessed by most investors, such as stocks, bonds, or cash investments. Due to their alternative nature, these investments may be less liquid than their traditional counterparts and may require a longer investment period before any material value is realized,” according to Preqin.
The Ben Way Benefits Clients
As noted above, bonds and equities don't dwell in the alternative assets universe. As such, one of the most frequently cited concerns advisors and end users have with “alts” is liquidity or lack thereof. Fortunately, the Beneficient Company, also known as Ben, sources liquidity in the alts arena and does so on behalf of a variety of clients.
“High net worth (HNW) investors hold more than $700 billion of alternative assets. By leveraging Ben’s innovative platform, HNW investors can secure liquidity for their alternative assets, plan for the future, or reposition their portfolios,” according to Ben. “Approximately 1,300 small-to-mid-sized institutions holding more than $475 billion of alternative assets lack the same exit opportunities as large institutions.”
Importantly, Ben provides enhanced alts liquidity across a variety of asset classes, including feeder funds, fund of funds, real estate, private debt, private equity, structured credit, natural resources and non-listed business development companies (BDCs) and real estate investment trusts (REITs).
“Ben provides private trust solutions, including a unique suite of lending and liquidity products, to owners of alternative assets, focused on offering liquidity, with proprietary capital offered from our own balance sheet,” says Ben. “Our suite of trusted products and services was developed to effectively serve high net worth (HNW) individuals, small-to-mid-sized institutions, wealth managers and investment managers.”
Liquidity Is Imperative
While alts are important portfolio diversification tools and can enhance client outcomes, the fact of the matter is these assets aren't don't have deep liquidity pools as do Treasuries are shares of Apple.
Compounding that issue – one that Ben solves – is that many brokers aren't incentivized to provide liquidity for alts although it's alts investors that need it the most.
“They are more likely to need liquidity because of a change in financial circumstances, a life event, or uncertain markets and may need it quickly,” adds Ben. “However, those who want to sell early are often ignored by intermediaries in the secondary market, who traditionally target large institutional clients.”
In a normal setting, an alts investor, whether it's a high net worth client or a smaller institution, may need to hold their investment longer than they desire, but Ben solves that problem.
“For investors who want to sell their alternative assets early, Ben—acting as principal and using its own balance sheet—can deliver liquidity in a simple, rapid, and cost-effective way. Ben reduces the cost, complexity, and time involved with selling alternative assets in the traditional secondary markets,” according to the company.
Bottom line: Many clients want to be involved with alts and that number is likely to increase going forward. Ben provides the avenues for getting out when the time is right.