Alternative Allocations: The role of alts in modern portfolios with guest Bill Duffy, Fidelity

In the latest episode of the Alternative Allocations podcast series, I was joined by my friend Bill Duffy of Fidelity Investments, as we explored the role of alts in modern portfolios. Bill and I discussed advisor adoption, product evolution, advisor education, and the importance of alternatives in achieving client goals.

We discussed the catalysts for the growth of alternatives in the wealth channel—the strong historical results of private markets, and product evolution, from drawdown to evergreen funds. Bill noted that, “The third major aspect we're seeing that's driving the growth of alternative investments for private wealth is the caliber of the managers that are now really focused on this channel.”

Bill added that, “Increasingly, wealth managers recognize that by allocating a portion of an investor's portfolio to private markets, they may help them to achieve their long-term financial goals better than just having your portfolio allocated only to traditional investments.” Like Franklin Templeton, Fidelity has built out educational content to help advisors in allocating to alternative investments.  

Bill identified one of the biggest challenges for advisors is accessing the underlying data, especially for private markets. “Today in the traditional space, an advisor might go to a Morningstar to get a return series. It's really challenging for most wealth managers to access a database of historical information on alternative investment performance, as well as to compare individual funds.”

While the data exists, it is expensive and delayed, due to the challenges in collecting the underlying data. Bill said, “We are starting to see some of the portfolio construction tools and some of the alternative investment fintech platforms really try to build modeling solutions to help enable advisors to access these markets.” 

From an education perspective, I asked Bill about areas of focus to drive better adoption. Like our focus, Bill noted that advisors need help in understanding the merits of underlying asset classes, training on product structures and portfolio construction. He stated that we need to create and deliver more content that the client can use. We discussed the various types of content from white papers to blogs to podcasts and in-person engagement.

From a product offering perspective, we discussed two growing areas of interest—model portfolios and public-private products. Model portfolios have been gaining traction and Bill anticipated that we could see more public-private products in the coming year.

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