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Overview of Alternative Investments

  • Overview of Alternative Investments
  • Market Trends and Adoption
  • Morgan Stanley’s Alternatives Platform
  • Investor Considerations

On this page

  • Overview of Alternative Investments
  • Market Trends and Adoption
  • Morgan Stanley’s Alternatives Platform
  • Investor Considerations
PE/VC/April 21, 2026/2 min read/youtu.be

The Growing Role of Alternative Investments | Morgan Stanley

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This Morgan Stanley "Alts Report" features Alli Nest, Head of Investment Solutions Products, discussing the rapidly expanding landscape of alternative investments and their strategic value for high-net-worth investors.


Overview of Alternative Investments

Alternative investments encompass assets beyond traditional stocks and bonds, including private equity, private credit, real estate, infrastructure, and hedge funds [01:02]. They are characterized by their lack of direct ties to broader market movements, offering unique opportunities during periods of market stress [01:11].

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Published
April 21, 2026
Read time
2 min read
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The primary roles they play in a portfolio include:

  • Diversification: They maintain low correlations to traditional equity markets, helping to reduce overall volatility [01:38].
  • Growth: Focused on generating excess returns through venture capital and leveraged buyouts [01:56].
  • Income Generation: Strategies like non-traded REITs and private credit offer higher yields and inflation hedging compared to traditional fixed income [02:06].
  • Tax Advantages: Certain products, such as equity exchange funds, can help mitigate concentrated stock positions and defer capital gains [02:22].

Market Trends and Adoption

The demand for alternatives is surging, with global assets under management (AUM) in this space expected to more than double over the next decade [00:43]. High-net-worth clients are currently the fastest-growing segment in terms of adoption [00:43].

Key drivers for this shift include:

  • Shrinking Public Markets: There are one-third fewer public companies today than 20 years ago [03:40].
  • Staying Private Longer: Companies are remaining private for twice as long as in the past [03:48].
  • Private Revenue Dominance: Currently, 80% of companies generating at least $100 million in revenue are private [03:54].
  • Shift in Lending: Bank participation as primary lenders has dropped by 60% since the mid-1970s, making way for private credit [04:02].
  • Real Estate Ownership: Approximately 94% of real estate is privately owned [04:02].

Morgan Stanley’s Alternatives Platform

Morgan Stanley is the largest alternatives provider "on the street," managing over $250 billion in client AUM in this asset class [03:18]. The firm recommends that alternatives can constitute as much as 25% of a client's investment portfolio [02:39].

Details of their platform include:

  • Expertise: A dedicated team of 300 professionals and a 45-year history in the field [04:50].
  • Exclusivity: Last year, 80% of the funds offered were either exclusive, "first look," or featured improved economics for clients [05:12].
  • Variety: The platform offers a menu of approximately 220 third-party and proprietary funds [05:21].
  • Accessibility: Newer "evergreen" funds and registered vehicles provide better liquidity, lower minimums, and simplified tax reporting [04:10].

Investor Considerations

While beneficial, alternative investments are complex. Investors are encouraged to work with financial advisers to navigate several critical factors [06:02]:

  • Tax Efficiency: Understanding the different tax implications of private structures.
  • Liquidity Needs: Alternatives often involve "illiquidity premiums," meaning capital may be tied up for longer periods.
  • Personal Preferences: Aligning specific alternative strategies with long-term financial goals and risk tolerance.

Jun 2, 2026

Finding Balance: Growth, Income and Liquidity | 1 Jun 2026 | Morgan Stanley

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