It was just over a year ago that I wrote about both the gap between institutional and retail investment portfolios (old news) and the rapid growth and evolution of products vying to close that gap (new news). Since then, the push to bring alternative investments to retail investors has only increased. More funds, more firms, more partnerships between alternative asset managers and traditional mutual fund managers. More retail dollars flowing to these funds, firms, and partnerships. And in a sign of all that is still yet to come, this past year has also brought major policy shifts, most notably the presidential executive order authorizing private markets in 401(k) plans.
We are way past the days when “democratization of alts” meant niche fintech platforms offering single asset, often esoteric investments. The landscape today is far broader and deeper, with active participation from high-quality, experienced alternative fund managers.
So this week, I’ll deviate again from our usual format. Instead of responding to a reader question, I want to take a beat and reflect on both the progress and the ongoing challenges in the drive to bring alternative and private markets to retail and individual investors.
The Momentum is Real
I’ve previously highlighted the trend of established alternative asset managers innovating on their product lineups and rolling out registered evergreen closed-end interval and tender offer funds (CEFs). Compared to traditional private drawdown funds, these CEFs, for a variety of structural reasons, tend to be easier to digest for retail investors and the financial advisors that service retail investors.
For starters, CEFs have the flexibility to accept investors at varying wealth levels, including those at the accredited investor level or even below. Lowering the wealth hurdle naturally eases access for retail investors. Other features include: 1) evergreen investment with immediate exposure versus private commitments funds that experience J-curves and require capital call management; 2) periodic liquidity, even if limited – CEFs typically offer quarterly liquidity with a fund-level gate; and 3) easier tax documents – CEFs issue 1099-DIVs vs. private funds that issue K-1s.
Taken altogether, it makes sense that these registered CEF structures have increasingly become the wrapper of choice to bring alternative investment strategies to a retail audience. When I wrote about this topic a year ago, there were 230 of these closed-end interval and tender offer funds, managing $175 billion dollars in assets.1 As of September 30, 2025, there are now 304 closed-end interval and tender offer funds, managing $252 billion in assets.2 The number of funds has increased by 32% and the level of assets has increased by 45%. And while these numbers are still small relative to the size and scale of alternative investments in traditional drawdown structures, they demonstrate that the pace of adoption is picking up.
The success of retail-oriented strategies (including those outside the registered CEF world), when measured by AUM growth, is remarkable. The data on hand is a little outdated, but I’ll use KKR’s experience in retail-oriented strategies as a prime example.3
In Q4 2023, KKR reported on an earnings call that the firm was raising $500 million a month across the firm’s retail funds.4
By June 2024, just two quarters later, KKR reported inflows of closer to $900 million a month across retail funds.5
As of June 2025, KKR’s retail funds reported reaching $25 billion in assets.6
Like I’ve said before, the directional flow of dollars toward alternative investment strategies seems to me an indication that retail investors are eager for more options. More specifically, they want options from credible, experienced investors.7
But Challenges Persist
One of the more predictable, if slightly ironic, challenges to arise alongside the expansion of retail-oriented alternative funds is the inevitable shift from not enough choices to too many choices, particularly in certain strategies.8 Benchmarking evergreen strategies in private credit and private equity has become a new and increasingly sought-after endeavor. There is little agreed-upon consensus at the moment, though I suspect investors will coalesce around some solutions provider in the coming years.9
In general, evaluating alternative investment firms, funds, and strategies is fundamentally a different exercise than what most individual investors are used to. Even if the industry is able to create more investment access points, it’s unclear if there’s a way to create more information access points. Institutional investors engage in due diligence processes that are functionally not possible for most individual investors to replicate.
That said, investment access is still uneven. For many of the retail-oriented alternative funds, financial advisors remain the primary distribution channel. Individual investors without dedicated wealth advisors will continue to face friction when trying to allocate capital to these private market funds from established alternative asset managers.
When we launched Ivy Invest, we built around the thesis that all individual investors deserve access to institutional-quality alternatives. Since then, the product landscape has evolved in a lot of compelling ways. But for individual investors, many alternative funds are still hard to find, hard to understand, and hard to access. So our goal remains unchanged: provide individual investors with an institutional endowment approach to alternatives, but let’s make the experience modern, transparent, and easy.
I think we’re still in the early innings of the alternative investments to retail investors phenomenon, but things are progressing quickly. I’ll keep you posted from time to time as the landscape continues to take shape.
As always, thanks for joining this week! Reach out with questions to: askacio@ivyinvest.co.
See you in two weeks,
Wendy
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Source: XA Investments Interval and Tender Offer Fund Mid-Year 2024 Market Update, June 30, 2024.
Source: XA Investments Interval and Tender Offer Fund Market Monthly Update, September 30, 2024.
KKR is certainly an outlier in its fundraising success, but I would posit that the size of its success is indicative of broader retail demand. I’ll also note here that Ivy Invest is not invested in KKR and is referencing the firm purely as an illustrative example.
Source: KKR Q4 2023 Earnings Call Transcript and Investment News.
Side Letter: KKR’s target-date trajectory, August 2025.
Of course, there’s the old adage that investment products are sold, and some of the large alternative asset managers have built great sales teams. Even so, the scale of the uptake signals something about demand.
Direct lending being probably the most popular and prevalent strategy.
I have no doubt it will become its own cottage industry, as winning the race to serve as a benchmark provider can be an absurdly lucrative role. I’ve seen a few attempts at benchmarking, including this one from SIPA Metrics (July 2025), shared by a friend in the LP world.