The expansion of private market asset classes continues to reshape institutional investment, led by the private credit surge filling the lending gap with direct, floating-rate structures, attractive risk-adjusted returns, and portfolio diversification. Private markets incursion into public markets’ share seems to be radiating in all directions as asset and fund managers, fintech disruptors, and certain limited partners (LP) create new entities and structures to gain access (and open access to) new legions of investors.
These ingenious alternative investment vehicles have formed the epicenter of financial product innovation for the last decade. They have permanently reformatted the entire capital markets ecosystem, making it infinitely more complex with a public-private convergence. Now, as part of a movement towards the retailization of private markets, buy-side architects are developing new ways to reach the HNW and ultra-high-net-worth (UHNW) individuals set to account for an astonishing 42% of the total wealth transfer, about $36 trillion.
The evolution of fund structuring and the resulting convergence of asset classes are fundamentally reshaping institutional asset managers’ product strategies, prompting a transformation at the core of their businesses. Here is a primer on the various private market strategies tailored to mass-affluent segments and how firms can adapt their operations and data infrastructure to prevent bottlenecks and capitalize on the lucrative cohort of investors.
Follow the money... to the mass affluent
There are more wealthy people in the US than ever before. The so-called Great Generational Wealth Transfer is $84 trillion (<--link to our $84 T opp post) of money in motion. Eighty-one per cent of those set to inherit large wealth from their families plan to replace their parents’ wealth management firms, unsatisfied with poor digital offerings or a lack of services and products.i Certainly not all of these retail customers are affluent. Yet 42% of the wealth transfer will involve inheritances amongst UHNW families. Buy-side managers are well aware of the opportunity to compete for new retail business. Private markets promise higher yields and the evasion of volatility in equities present great avenues to win affluent cohorts and family offices’ business.
Follow the signs: regulatory tailwinds drive retail access
Regulators are cooperating. In May, SEC Chair Paul Atkins announced the agency is reconsidering a 23-year-old rule that limits closed-end funds with retail investors to holding no more than 15% of their portfolios in private markets and requires a minimum initial investment of $25,000 for such investments. Additionally, the SEC and CFTC voted to delay the compliance deadline for Form PF amendments to October 1, 2025, postponing enhanced confidential reporting requirements for certain SEC-registered private fund advisers.
Follow the signs: PE turns to retail investors
As PE exits continue to limp along, PEs are looking to retail investors for fundraising. In May, JPMorgan Chase announced that the PE group within its asset-management arm has reached the $1 billion milestone for a private-markets fund set up to attract individual investors.ii That fund returned 18% YoY through February.
BlackRock, State Street, KKR, and Apollo have unveiled ETFs, target date retirement funds, and other investment vehicles aimed at HNW retail investors. Private credit fundraising surged 60% in the first quarter, showing strong investor demand despite macroeconomic headwinds.iii
Retailization of alternatives: 5 favorite fund structures
1. Interval Funds
These are open-ended funds, meaning they only offer regular redemption opportunities to investors at agreed-upon frequencies. UHNW investors like the higher yield and the flexibility to invest in different types of private market assets like real estate. These are generally less liquid vehicles than mutual funds; however, managers don’t stop innovating there. Apollo recently launched the Apollo Asset-Backed Credit Co., a semi-liquid vehicle that gives private wealth clients access to asset-backed loans with periodic liquidity.
2. Target-Date Funds
Apollo partnered with State Street to launch target-date funds that include both public and private market investments. These funds are designed for defined contribution plans like 401(k)s and offer participants access to a mix of index funds and private market exposures. Empower, the nation’s second largest retirement plan provider, opened access to private equity, private credit and private real estate funds to participants, to be included within defined contribution retirement plans. Retail investors have been exposed to alts through pension funds increasingly over the past decade as they joined the trend in seeking diversification and stronger yields. Public pension funds now have more than 30% allocation to private market classes.
3. Evergreen Funds
Semi-liquid evergreen funds like KKR’s Strategic Income Fund are immensely popular and give IAMs a lower redemption risk. PitchBook’s recent report revealed that retail-focused evergreen structures are expected to increase their total AUM from $70 billion to $220 billion by 2029, ultimately accounting for 2.8% of PE’s overall AUM. Wealth advisers are seeking broader investment access as the public markets shrink.iv This year, firms like HarbourVest and Hamilton Lane launched their first evergreen structures for HNW investors to access private market opportunities. Hamilton Lane has introduced its evergreen fund, HLVCG, highlighting its diversified portfolio across vintage years, transaction types, managers, strategies, and geographies. Evergreen funds, with their continuous capital raising and redemption features, introduce operational challenges for asset managers.
4. Separately Managed Accounts (SMA)
Asset managers like Nuveen have been actively promoting direct indexing and separately managed accounts (SMAs) as alternatives to ETFs for engaging high-net-worth individuals. Now, they’re shifting focus to broaden access for retail investors with specialized interests—such as ESG strategies, thematic investing, and private credit. SMAs have become a favored instrument in accessing affluent classes, while offering them the desired flexibility, customization, and tax benefits. HNW investors are increasingly using SMAs as part of a holistic planning strategy to minimize tax liabilities across their estate prior to and after transfer. SMAs have the look and feel of passive investment vehicles like ETFs but are more flexible and directly indexed.
5. Feeder Funds
Illiquid feeder funds furnish retail clients with diversified, lower-commitment entry points to private markets, exposure to elite private funds without needing institutional-level capital. In feeders, HNW investors aggregate capital into their respective feeder funds, which ultimately invest assets into a centralized vehicle known as the master fund. This allows funds to benefit from economies of scale and pass-through tax treatment. Hedge funds and IAMs like this structure for clients interested in niche markets.v KKR and fintech partner Moonfare have created such a vehicle.
Data, digital experience, and reporting demands
Along with ETFs, real estate investment trusts (REIT), business development companies (BDC), and of course, tokenization, these five emerged as preferred structures to attract wealthy investors. Firms are increasingly looking to these, as well as secondary markets or other structured products to improve liquidity options for investors in these traditionally illiquid spaces. But these funds require unique datasets in order to satisfy retail investor reporting requests, with timely and precise reporting.
High-end investors frequently request detailed insights into current returns, capital balances, and outstanding commitments. They expect robust analyses that span multiple dimensions—sliced and diced according to performance over time, by investment vintage, and realized versus unrealized gains. Their holdings often extend across asset classes and vehicles, like SMAs. Moreover, millennial and Gen Z investors—who are digital natives—prioritize personalized, transparent, and digitally-driven experiences. Their increasing interest in complex, illiquid, and semi-liquid assets underscores the demand for more advanced portfolio construction, sophisticated risk modeling, and robust operational oversight.
To meet these expectations, investment managers must ensure that all forms of reporting—tax, regulatory, and performance—are underpinned by precise data management across various levels, including individual accounts, account groupings, and strategy layers. Today’s HNW individuals and family offices often employ estate planning strategies that span multiple jurisdictions, requiring investment structures tailored to complex cross-border regulatory and tax considerations.
Operational shifts to serve affluent investors
To effectively seize this opportunity, firms must be equipped to manage the complexities associated with these vehicles. Without streamlined data flows to and from a centralized source, administration can become burdensome. Leveraging advanced investment operations platforms can also reassure regulators that processes such as clearing, settlement, transfer, and custody are being handled with accuracy and security.
IAMs that can deliver compliant, real-time, high-resolution analytics across portfolios containing assets with varying durations, risk exposures, and benchmarks will be uniquely positioned to capture the opportunity presented by the generational wealth transfer.
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5 Key Takeaways
Q1: Why are private markets attracting institutional and retail investors alike?
A1: Private markets offer floating-rate, direct-lending strategies with attractive returns and diversification, making them appealing amid market volatility.
Q2: How are fund managers targeting high-net-worth investors?
A2: Through semi-liquid evergreen funds, SMAs, interval funds, and feeder structures tailored for flexible access and tax-efficient wealth transfer.
Q3: What role does regulation play in expanding retail access to alts?
A3: Regulators are revisiting outdated limits on retail fund exposures and extending deadlines, encouraging broader participation in private markets.
Q4: What are the operational challenges for IAMs targeting affluent investors?
A4: Managers must overhaul data, reporting, and risk systems to handle granular, real-time demands from digitally savvy, multi-asset investors.
Q5: What makes affluent investors a critical target for the future?
A5: They’re inheriting $36 trillion, demand modern digital experiences, and prefer private market exposure—offering growth for agile asset managers.
