Originally published on Techcrunch+ by David Jegen, Abdul Abdirahman | September 14, 2022
It took more than 30 years for alternative asset classes like venture capital, private equity and hedge funds to become must-have portfolio allocations, but they have finally arrived in force. Private investments in alternative assets grew to $13.3 trillion from $4.6 trillion over the 10 years ended 2021, and advisers now routinely recommend allocating 10%-25% of portfolios in these asset classes.
Just as these traditional alternatives are becoming a consistent part of the modern investment portfolio, a new era of alternative assets is emerging, fueling an even broader and more fragmented landscape for investing. Dozens of platforms have launched to fractionalize, package and distribute everything from farmland, litigation finance and P2P lending to art, wine and collectibles.
Data, Analytics, and Aggregation
This industry needs a Morningstar. When the mutual industry surged in the 1980s, Morningstar helped standardize and normalize the criteria for evaluating mutual funds. They gave retail investors confidence and financial advisors cover. It will not be easy to do the same across so many asset types, but consistent measurements of risk, volatility, liquidity, and reputation are possible. For these asset classes to scale, they will need institutional capital, actively managed funds, and financial advisors; and all of these depend on better data. Data foundations exist in some asset classes, Coinmetrics and Kaiko for crypto; DappRadar for NFTs; and Art Market for art; but investors need a trusted source of normalized investment metrics across all the Alt asset classes.
Read more on Techcrunch+: The alternative asset class needs new infrastructure — who will build it?