Alternatives in retail investor portfolios a $1 trillion-plus market opportunity
The rise of digital platforms that enable investors to own stakes in art, wine, farmland, metals and other alternative assets (“alts”) has democratized an asset class once only available to institutional and ultra-high net worth investors. The companies poised to take advantage of burgeoning interest from individuals with newfound access to this category are those that best educate potential investors and address their misperceptions. That’s according to a recent survey of active retail investors conducted by Opinium on behalf of Lansons.
The majority of Americans are unfamiliar with digital platforms that offer access to alts. Four out of five (80%) have either never heard of these platforms or don’t know much about them. The awareness gap is largest amongst older Americans, who are generally more affluent. Three in ten Gen Z and one in four Millennials (30% and 25%, respectively) know of digital alts investing platforms or already invest through one. Comparatively, only 17% of Gen Xers and 13% of Boomers have knowledge of alts investing platforms or already invest in alts.
What's at stake
Educating investors about the investment case for alts, and building compelling and differentiated brands, is key to gaining market share in this nascent industry. Consider that one fifth (20%) Americans would strongly consider investing in alts, and 7 percent are already planning to do so. Further, active investors – those who currently have investment accounts for stocks, bonds or cryptocurrencies – would be willing to allocate 25% of their portfolios, on average, to alts. This represents more than $1.3 trillion dollars in potential retail investment.*
Barriers & opportunities
The biggest barrier to investing in alts is concern about fraud and scams (42%). “When any new type of investment product is introduced, it is natural that investors may be sceptical,” said Josh Passman, CEO of Lansons New York. “Proactively showcasing a commitment to compliance, humanizing the people behind the platforms, and amplifying third-party endorsements including positive media coverage, are among the tools available to build trust with current and potential investors.”
Current market conditions also provide a timely opportunity for the industry to educate Americans about the investment case for alts. Nearly half (47%) of those surveyed expressed extreme concern about the impact of inflation on their investments. “Given that alts including wine, gold and real estate are generally regarded as strong hedges against inflation, the current market climate presents a meaningful moment in time for marketers to highlight the benefits of alts as part of a diversified investment portfolio,” added Josh Passman.
Other key findings
Lansons partnered with strategic insights agency Opinium to conduct a nationally representative survey of 1,832 Americans. The survey was weighted using the latest figures from the U.S. Census Bureau. “Active Investors” is defined as anyone who has an individual investment account, including in stocks, bonds, crypto, etc. The study was conducted between September 6 –September 12, 2022.
*Of the 1,832 adults surveyed, 25% were active investors, which is equivalent to 64,585,820 Americans (258,343,281 (U.S. Adult population) x 25% (active investors)). The median amount held in investments among active investors was $82,013.27. On average, active investors we’re willing to allocate 25% of their portfolio toward alternative investments. This equates to a median of $20,175.27 to be potentially invested in alternative assets per the average active investor ($82,013.27 * 25%). The median potential investment in alternative assets ($20,175.27) x the number of active investors in the U.S. (64,585,820) is equal to 1.303 trillion.