Inside Alts: Why Apollo's CEO thinks your investment strategy is broken

Private Market Growth & Dynamics - Private markets are opening to the public, with Apollo Global at the center of this shift, viewing private markets as the next great investment frontier [1] - Apollo's assets under management grew from roughly $40 billion in 2008 to $840 billion today, outpacing the growth of companies like Google, Amazon, and Microsoft, driven by fundamental factors reshaping private markets [3][4] - The number of public companies has decreased from 8,000 to 4,000, and the S&P 500 is heavily concentrated, with 10 stocks representing 40% of the index, raising concerns about diversification [7][8] - Active management struggles to outperform the index, with 90% of equity market participants failing to do so for 20 years, leading to a shift towards passive investing and ETFs [9][10] Alternative Investments & Investor Access - Alternatives, traditionally defined as private equity, venture capital, and hedge funds, are now viewed as any alternative to publicly traded stocks and bonds [12][13] - Individual investors could eventually match institutional investors in market size, with family offices already having over 50% of their investments in private markets [16][17] - Retail investors are expected to participate in private markets indirectly through traditional asset management firms, leading to a convergence of public and private markets [20] - Criticisms of alternative investments include lack of transparency, illiquidity, high fees, and potentially decreasing returns as more money flows in [22] Private Credit Market - The private credit market is estimated to be $1.5 trillion if defined as direct lending and leveraged lending below investment grade, but $40 trillion if including investment grade [44] - Banks are heavily involved in private credit, as everything on a bank balance sheet, such as loans to customers and companies, is essentially private credit [36] - Long-dated investments, such as those in energy transition, manufacturing, and infrastructure, are increasingly being funded outside the banking system by institutional investors [41] Liquidity & Risk - The perception that private is risky and public is safe is challenged, suggesting both are risky and safe, with the primary difference being liquidity [60][61] - In the investment-grade private market, investors working with Apollo can access 100% of their money every 30 days [49] - Public markets may not be as liquid as perceived, with it taking 5 days to sell an investment-grade corporate bond [55] Investment Advice & Future Trends - The value of advice is increasing as investors are asked to consider new investment options, requiring advisors to provide guidance on navigating the complexities of public and private markets [67] - Guaranteed lifetime income is expected to become an important choice for individuals within their 401(k) plans, addressing the retirement income deficit [73][76] - The availability of capital in private markets is allowing companies, including AI and defense companies, to stay private longer, investing for the long term without being driven by quarterly earnings [81][82]