The connection between alternative investment managers and financial advisors is expected to tighten this year, particularly as the new administration of incoming republican President Donald Trump is widely considered friendlier to nontraditional money managers than a Democrat.
And after two years of more than 20% returns in the broad stock market, some financial advisors are also busy convincing clients to alter strategies beyond a portfolio of stocks and bonds.
Look no further for validation that alternative asset managers are making hay than the most recent alternative investment offering by Blackstone Inc. that focuses on investing in infrastructure and is sold by financial advisors to wealthy clients.
Launched in August, Blackstone Infrastructure Strategies said on Wednesday it had passed an important sales milestone, raising $1.057 billion so far from clients.
It’s the second straight year that Blackstone has launched a new fund in the alternative investment space and had a hit right off the bat. Last January, the brand-new Blackstone Private Equity Strategies Fund said it had raised $1.3 billion.
“The managers, not just Blackstone, have done well with these products, which have seen an incredible amount of fundraising in last few years,” said Kevin Gannon, chairman and CEO of Robert A. Stanger & Co. Inc. “And these managers are identifying opportunities, finding assets, and raising capital. In my opinion, they are high-quality investors and not just marketing guys selling alternatives like the products of yesteryear.”
Top firms including Morgan Stanley and others, according to industry sources, have been leading sellers of Blackstone’s line of alternative investments. Those include its real estate investment trust, Blackstone Real Estate Income Trust Inc., and its business development company, Blackstone Private Credit Fund.
Blackstone has focused on institutional investors until recently, and in the past decade has moved into the financial advisor marketplace that focuses on sales to wealthy individual clients. Critics of alternative investment sales to individuals note that institutions can absorb the risk of alternative investments in a more efficient manner than an individual family.
Blackstone is not the only manager to focus on infrastructure. KKR & Co. Inc. in 2023 opened the KKR Infrastructure Conglomerate Private Placement and KKR Private Equity Conglomerate Private Placement, raising $10.8 billion through last fall, according to Robert A. Stanger.
According to Bloomberg News, about 20% of Blackstone’s $1.1 trillion in assets are held by wealthy individuals and families.
Investors can withdraw as much as 3% of the fund’s net asset value each quarter, according to Bloomberg, and the Blackstone Infrastructure Strategies fund charges an annual management fee of 1.25% and take 12.5% of total returns, with the profit allocation kicking in after the fund has generated a 5% annual gain.
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