CAIS Summit Underscores Alts Adoption in Wealth Space
Asset managers and advisors converged in Los Angeles this week for the fourth annual CAIS Summit—a conference that brings together many of the alternative investment platform’s users. It also serves as a useful barometer for the ongoing trend of increased adoption of private markets in the wealth space.
Attendance at the show has grown from a few hundred at its inaugural event to over 1,200 at this year’s show. Of that, CAIS reported 325 wealth management firms, and 800 advisors are attending the event. (In all, CAIS said that 2,000 wealth firms and 62,000 advisors currently use its platform.)
On the asset management side, most of the major alts managers increasingly targeting the wealth space are also represented, including names like Apollo, Ares, Blackrock, Blackstone, Blue Owl, Brookfield Oaktree, Carlyle, Coller Capital, Fidelity, Franklin Templeton, Goldman Sachs, Invesco, JP Morgan, KKR, Partners Group, T. Rowe Price and others.
In reflecting on the evolution of the space since launching CAIS about 15 years ago, CAIS CEO and founder Matt Brown pointed to the rush by firms that historically served institutional investors to gain traction in the private wealth space.
“The alternative asset management community really cares about wealth management,” Brown said. “That hasn’t always been the case. By the way, that’s a huge positive for the advisor community. Alts managers see an opportunity to grow their businesses, and advisors are no longer an afterthought. [Asset managers] are collaborating, designing products, rolling out education and building teams to service you. They are all in. My recommendation is to take advantage.”
Several major trends were apparent throughout the first full day of the conference, including the coalescence around evergreen funds (interval funds, tender offer funds, BDCs and non-traded REITs) as the preferred vehicle for delivering private markets to the wealth channel. Today, there are more than 400 registered funds available with alts exposure, and about half of those have been launched in the last 24 months. (A recent report from consulting firm Deloitte projected that over the next five years, semiliquid funds’ global AUM could grow 12-fold to $4.1 trillion.)
In addition, the convergence of public and private markets, marked by a surge in mergers and partnerships among traditional and alternative asset managers, was a significant theme. Several products (some as model portfolios, others as semiliquid funds) have already come to market with more on the way.
For its part, CAIS has launched a models marketplace that is selectively adding managers and strategies.
“With the use of models, it goes from manager selection to outcomes,” said CAIS Advisors Chief Investment Officer Neil Blundell. (CAIS Advisors was created last year to assist financial advisors with streamlining portfolio construction.) “It’s a big strategic shift. It’s a lot easier to say, ‘Are you looking for enhanced income? Diversification? Growth? Etc.’ Models are designed with strategic asset allocations in a fashion that can deliver that outcome.”
Lastly, unsurprisingly, AI was a significant theme, both as an investment opportunity gained via exposure to private market stakes in AI firms and data center and energy infrastructure, and in terms of its application in the space. (For its part, CAIS showcased AI that will soon be integrated into its platform, named CAIS.ey.)
The state of private credit was also a hot button topic, especially amid the announced bankruptcies of U.S. auto parts supplier First Brands and car dealership Tricolor and recent comments from JPMorgan Chase CEO Jamie Dimon during the bank’s third quarter conference call.
“I probably shouldn’t say this, but when you see one cockroach, there are probably more,” Dimon said during the call.
Private credit managers bristled at those remarks and pointed to the fact that private credit has withstood several business cycles with low loss rates. They also pointed to the importance of due diligence, underwriting and sponsor quality.
“Credit quality is reasonably good,” said Glenn R. August, founder and CEO of Oak Hill Advisors. “We are not leveraging these investments 10 times with mark-to-market financing. … We learned in 2008 that marked-to-market financing doesn’t work.”
In a separate session, Ken Kencel, President and CEO of Churchill Asset Management, pointed to his firm’s average loss rate of five basis points per year on private credit as a sign of stability in the asset class.
“We welcome the scrutiny because we know we’ve proven ourselves over 20 years,” Kencel said. “The best managers have a longstanding track record you can look to support performance and values.”
He added that focusing on less volatile sectors—for example, it doesn’t do loans to energy companies, restaurants or retailers—as a major part of the firm’s strategy to avoid risk.
“Our belief is individual investors in particular are looking for excellent risk-adjusted returns,” he said. “They are not looking for managers chasing an extra 50 basis points. They know that chasing leads to taking on more risk.”
He also pointed to the significant number of deals the firms passes on financing.
“There are top borrowers that you want to finance,” he said. “And then there are deals you turn down. In our case, those are deals that are cyclical and higher risk. It’s not about chasing yield. It’s about financing the best businesses. That’s where you want your direct lending partner to be.”
Comments at the conference also touched on the state of the macroeconomy and regulatory environment. Despite the increased volatility in markets largely stemming from President Donald Trump’s tariff policies, speakers retained a bullish outlook on the economy. Many pointed to how markets rebounded after a sharp drop in April from Trump’s “Liberation Day” announcement, and in subsequent months, reactions to shifting policy have been more muted.
“What I look for is not what politicians say, but what businesses need and what consumers are demanding. That leads to a series of trends that policymakers usually back,” said Ken Mehlman, partner, global head of public policy and affairs at KKR. (Mehlman previously served stints as chair of the Republican National Committee from 2005 to 2007 and as White House director of public affairs for two years during President George W. Bush’s administration.)
“Is there a risk that because of policy change and political change, it could be disrupted? Yes,” he said. However, he underscored that focusing on trends that transcend who is in power is a way of limiting policy risk.
On the regulatory front, panelists welcomed the lighter touch from government agencies and expected that to continue, potentially expanding access to private markets to more investors.
In concert with the conference, CAIS announced expanded integrations with several TAMPs (Orion, Envestnet and Vestmark) and managed account platforms. It also announced a partnership with secondary market specialist LODAS Markets.
LODAS Markets enables investors in private vehicles such as non-traded REITs, interval funds and other structures, an option outside those funds’ dedicated redemption windows to sell shares. Through the partnership, LODAS secondary trading tech will be integrated into the CAIS platform. The functionality is expected to go live in the first quarter of next year.