Alt-Retail Partnerships – What Are They and Why Are They Popular?

Alt-retail partnerships, which see alternative asset managers and retail asset managers coming together to offer retail investors exposure to alternative strategies, are increasingly in demand. In this match-made-in-heaven, retail asset managers contribute scale of distribution and private wealth know-how, while alternative asset managers offer innovative portfolio construction, differentiated revenue streams and higher-return potential. Combined, they expand private market access within retail regulatory constraints. 

Recent transactions exemplify this dynamic. Last year, Capital Group and KKR launched a strategic partnership designed to make hybrid public-private markets investment solutions available to investors across asset classes, geographies and distribution channels. Similarly, Wellington Management, Vanguard and Blackstone formed an alliance focused on developing simplified multi-asset investment solutions that integrate Wellington’s sophisticated asset allocation with Vanguards scale and Blackstone’s alternatives exposure. 

Reasons for the proliferation of alt-retail partnerships:

• Tap retail distribution scale. Distribution scale remains a primary catalyst for the success of alt-retail partnerships. Although alternative asset managers have the option to launch their own products on custodial platforms, penetrating the mass affluent market through investment advisors requires extensive outreach, connections and education.

• Cost and benefit analysis. While a number of structures in Europe and the US already provide asset managers with access to the retail and private wealth markets, accessing these new pools of individual capital presents considerable operational and regulatory challenges. Managing large numbers of individual investors, who may be accessing these products with certain liquidity expectations, requires a different skill set and approach to investor relations than alternative asset managers may be used to. 

However, in the current challenging fundraising environment, we increasingly see sponsors concluding that the ability to raise capital from a broader investor base outweighs the regulatory and compliance burdens which may have deterred them from pursuing such products historically.

• Tailored products. Both sides of the alt-retail partnership can decide how to tailor their new working relationship and the resulting product offering. Key discussion points will typically include whether the partnership will focus just on distribution (for example, the retail sponsor distributing products managed by the alternative sponsor) or whether the parties will also design hybrid portfolio management products (for example, combining public and private market exposure) and whether such products should be co-branded.

• Strategic capital. Some of the alt-retail partnerships extend beyond offering products to new pockets of the retail market. The alternative sponsors and the retail sponsors can also cross-pollinate each other’s products, where the alternative sponsor can invest in the portfolio of the retail sponsor (for example, as a way to support trading in such product) and vice versa. 

• New structures. As demand for alt-retail products grows, so does the range of structuring options and regulatory pathways available to managers willing to take on this new market. In the EU we observe increased interest in the ELTIFs, designed to facilitate investments in long-term and illiquid assets by retail as well as professional investors, with a corresponding uptake in the UK LTAF. 

A recent report from Morningstar suggests that the assets under management in UK LTAFs, which, among others, seeks to encourage greater investment from workplace pension schemes, have reached £5 billion in 2025. In the US, we have seen a rise in the popularity of interval and tender offer funds that are continuously open to new subscriptions (either on a daily or monthly basis) and provide limited liquidity through periodic repurchase offers or tender offers for up to a certain percentage of the fund’s outstanding shares.

We welcome the opportunity to discuss any of the topics covered in this article in greater detail. Please reach out to us to arrange a conversation with our team.

Nyah Clark, Trainee, also contributed to this article.