Bank of America recently met with iCapital Network’s Chairman & CEO Lawrence Calcano to discuss the democratization of alternative asset investing. On Tuesday, Bank of America analyst Craig Siegenthaler said he is bullish on three leading alternative asset management stocks after his conversation with Calcano.
Shifting Strategies: Siegenthaler said private market strategies have been shifting over into the retail investing channel for the past several years. He said the U.S. is leading this transition, but he is witnessing growing interest from European banks as well.
Related Link: 8 Best Alternative Investment Platforms in 2022
One relatively recent development among some wealth managers is a shift from the traditional equity portfolio of 60% public equities and 40% bonds to a new allocation of 50% public equities, 30% bonds and 20% alternative assets, private credit, real estate, infrastructure, secondaries and hedge funds.
"We remain bullish on the retail adoption of private markets globally and this theme is one of the key components of our long-term overweight thesis on the Alts," Siegenthaler said.
How To Play It: He said he is particularly bullish on his three top alternative asset manager stock picks: Blackstone Inc (NYSE:BX), Ares Management Corp (NYSE:ARES) and Blue Owl Capital Inc (NYSE:OWL).
Siegenthaler said early retail alternative asset companies that launched in the 2010s generated largely disappointing returns, including many business development companies and real estate investment trusts. Today, Siegenthaler said Blackstone leads a group of companies that represent a much higher-quality second generation of retail alternative asset managers.
Benzinga's Take: Alternative investments have a mixed track record over the past decade, but you certainly can't argue with Blackstone's success. Blackstone shares have generated a total return of 1,590% in the past decade, compared to just a 277.7% total return for the SPDR S&P 500 ETF Trust (NYSE:SPY) in that time.
