Core Viewpoint - The article emphasizes the importance of consulting qualified investment advisors before making any investment decisions, highlighting that the opinions expressed are not investment recommendations [2][3]. Group 1 - The author has no financial positions in any of the companies mentioned, ensuring an unbiased perspective [1]. - The article is intended for informational purposes only and does not constitute an investment research report [2]. - The analysis is based on incomplete information, and the accuracy of the data presented is not guaranteed [2]. Group 2 - The views expressed may not reflect those of Seeking Alpha as a whole, indicating a diversity of opinions among analysts [3]. - The article clarifies that Seeking Alpha is not a licensed securities dealer or investment advisor, reinforcing the need for independent consultation [3].

You can find original article here WealthManagement. Subscribe to our free daily WealthManagement newsletters. Bringing Alternatives to DC Plan Participants Tops 2026 Regulatory Priorities “While much of year one of Trump 2.0 was spent getting key officials in place and navigating the longest government shutdown in U.S. history, experts expect year two to be busy at regulators like the Securities and Exchange Commission and Department of Labor, with the administration’s push to broaden access to private ma ...

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Core Insights - The research focus is shifting from equities to alternative investments such as crypto, commodities, and private markets, indicating a diversification in investment strategies [1] Group 1 - The trend towards alternatives does not imply that equities have lost their appeal, suggesting that equities remain a relevant investment option [1]

Price Target Adjustments & Ratings - Evercore reduces price targets for Blackstone to $180 from $197, maintaining an outperform rating [1] - Apollo's price target decreases to $145 from $160, also with an outperform rating [1] Alternative Investment Space - Apollo, Blackstone, and KKR operate in the alternative investment space, which is gaining increased allocation from advisors [2] - Alternative investments include real estate and private credit [2][3] - 401ks are increasingly allocating to alternatives globally, positioning Blackstone as a leader in this space [4] Market Sentiment & Sector Performance - The mood has soured for the financial sector, with financials down 2% in October while healthcare is up 5% [5] - The private equity space is considered oversold, with concerns surrounding private credit potentially overblown [6] Private Infrastructure as an Alternative - Private infrastructure is emerging as a new alternative investment due to funding gaps in government and municipalities [7] - BlackRock acquired a significant global infrastructure partnership [8] Competitive Landscape & IPO Market - Mid-tier private equity firms face intense competition, exemplified by auctions with a high number of bids [8][9] - The IPO market remains largely closed to old-line and manufacturing companies typically owned by private equity firms [10] Stock Rebound & Market Commentary - Apollo's stock is up almost 35%, Aries is up nearly 5%, and Blue Owl is up over 5% week-to-date [11] - Recent market commentary suggests concerns are idiosyncratic rather than systemic [11][12]

Market & Economic Outlook - The market initially reacted positively to the Fed's announcements, potentially anticipating an end to balance sheet runoff [1][2] - The Dallas Fed suggests the equilibrium for job creation is closer to 30,000 per month post-COVID, considering factors like reduced labor participation and immigration [3] - Increased productivity (up 1% to 2.5% from a decade average of 1.5%) means fewer workers are needed to maintain the same output [4] - Tariffs are considered inflationary, but upcoming tax refunds of $150 billion next February could stimulate the economy [5] - The market may be overly optimistic about the extent of interest rate cuts (100-125 basis points) in the coming year [6] - US deficits are a concern, requiring a strong economy to manage, and gold is seen as a hedge against potential inflation [10][11] AI & Technology - The AI market is in early stages, particularly regarding infrastructure investments in power and grid, and companies are primarily using AI to improve existing processes [8][9] - The full impact of AI on company margins is yet to be realized, as companies are still figuring out how to effectively utilize it [9][10] Alternative Investments - Franklin Templeton has $260 billion of its $1.6 trillion in alternative investments [13] - Individual investors are significantly under-allocated to alternative investments, with only 3% of advisor clients' portfolios allocated to alts [16] - The allocation to alts could potentially increase to 10-15% in the next 5 years, driven by innovation in investment vehicles and the role of financial advisors [17] - Innovation is making alternative investments more accessible to the average investor, similar to the introduction of mutual funds [15]

Core Viewpoint - The discussion centers around the Federal Reserve's policies, labor market dynamics, inflation, and the potential for growth in alternative investments, highlighting a generally bullish outlook on the economy despite some concerns. Group 1: Federal Reserve and Labor Market - The Federal Reserve has two main mandates: employment and inflation, with recent studies suggesting a lower equilibrium job creation number of about 30,000 jobs per month, down from 100,000 pre-COVID and 250,000 during the pandemic [2][3] - The labor participation rate has decreased, and immigration has significantly dropped, impacting the number of people needing jobs to maintain equilibrium [3] - Productivity has increased to 2.5% from a decade-long average of 1.5%, indicating that the labor market may be healthier than perceived, with fewer workers needed to sustain productivity levels [4] Group 2: Inflation and Economic Stimulus - Tariffs are contributing to inflation, and upcoming tax refunds totaling $150 billion in February are expected to stimulate the economy [5] - The market may be overly optimistic regarding potential interest rate cuts, but there remains a bullish sentiment due to fiscal and monetary policies [6] Group 3: Market Performance and AI - The S&P 500 and NASDAQ have shown significant year-to-date gains of 12.5% and 17%, respectively, indicating a strong market performance despite some corrections [7] - The discussion on AI suggests that while there may be concerns about a bubble, the market is still in the early stages of AI integration, with companies primarily focused on improving existing processes [9] Group 4: Alternative Investments - Franklin Templeton has approximately $260 billion allocated to alternatives out of $1.6 trillion, indicating a growing interest in alternative investments among institutions [12][13] - There is a significant opportunity for individual investors to access alternative investments, which currently only account for about 3% of advisor clients' portfolios, with expectations that this could rise to 10-15% in the next five years [16][17]

Industry Overview & Trends - The alternatives industry has grown significantly in the last 15-16 years, becoming more institutionalized with professional management and reporting processes [2] - Private credit may see a boom in an economic downturn due to big lenders' hesitancy and favorable terms for lenders [4] - Technology-focused investments are relatively uncorrelated to macro volatility due to secular trends [5] - Access to private equity is expanding from institutional investors to high net worth individuals and potentially 401(k)s [5][6] - Liquidity is a key issue in alternatives, requiring matching investor liquidity horizons with asset durations [6][7] Market Size & Opportunities - US private equity industry is valued at $3-4 trillion, compared to $8-10 trillion in 401(k)s, highlighting the potential of accessing the 401(k) capital pool [6] - Public markets in technology have approximately 700 companies, while the private market target is 20,000 companies, indicating broader opportunities in private markets [9][10] - A significant portion (20-30 trillion) of the public market value is concentrated in a few companies (the magnificent seven), suggesting diversification benefits in private markets [10] Investment Considerations - Alternative investments can be suitable for regular accredited investors depending on their profile and percentage of exposure [8] - Investing in private markets allows access to a broader range of companies compared to public markets [10]