Advisors Poised to Pour $2 Trillion Into Alternatives

• Interval funds grew 33% in assets during 2025, reaching $132 billion, with RIAs favoring them due to their lack of performance fees and embedded commissions compared to other semi-liquid vehicles.
• 82% of advisors cite diversification as their main reason for adding alternatives, viewing private capital as a solution to public market concentration in mega-cap stocks.
• Following 2026's redemption wave in non-traded BDCs and interval funds, 44% of advisors now demand greater transparency into holdings and performance, while 40% seek better education on client communication before allocating further.

Summary: Advisors Poised to Pour $2 Trillion Into Alternatives

Financial advisors are positioned for significant expansion in alternative investments despite recent redemption challenges. According to Cerulli Associates' 2026 U.S. Private Markets report, advisor-held alternative investments will grow by $2 trillion over the next five years, adding to the $2.2 trillion currently invested.

Key Developments:

Interval funds have emerged as the dominant vehicle, reaching approximately $132 billion across 147 funds by year-end 2025, with 33% asset growth in 2025. RIAs favor these structures because they typically avoid performance fees and embedded commissions found in other semi-liquid vehicles.

Primary Growth Drivers:

• 82% of advisors cite diversification as their main goal
• 67% of asset managers point to advisors' need to demonstrate client value
• 57% cite demand for income-generating investments
• 93% of managers identify greater accessibility as a key growth factor

Market Challenges:

A 2026 redemption wave in non-traded BDCs and interval funds exposed liquidity constraints, catching many advisors and home offices unprepared. This has created demand for improved transparency and education: 44% of advisors want greater transparency into holdings and performance, while 40% seek better client communication training.

Distribution Landscape:

93% of asset managers view independent RIAs as a top-five distribution opportunity. Meanwhile, 94% still rely on internal wholesaling teams despite growth in online marketplaces. The sector is expanding beyond individual products into model portfolios, multi-asset vehicles, and defined contribution plans.

The growth trajectory signals a fundamental shift in how alternatives are structured and distributed, requiring enhanced coordination among asset managers, platforms, and advisors to meet evolving market demands.