Alternate Investing: Masters in Business with Kristin Olson | Masters in Business
From Masters in Business
Kristin Olson•Global Head of Alternatives for Wealth, Goldman Sachs
Executive Summary
Alternative investments are becoming a core holding for wealthy individuals, driven by companies staying private longer and the search for yield and diversification.
Goldman Sachs is a major player, managing over $500 billion in private assets and recommending a significant allocation (e.g., 27% for moderate-risk clients) to alternatives.
The traditional 60/40 portfolio is being challenged, with a '60/20/20' model (60% equities, 20% fixed income, 20% alternatives) emerging as a new standard for diversification.
Due diligence in private markets is complex and resource-intensive, requiring large, specialized teams to assess managers, strategies, and risks, making professional guidance essential for most investors.
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Concerns Raised
A knowledge gap exists, with less than half of financial advisors actively discussing alternative investments with clients.
The risk of performance dispersion among evergreen funds is increasing, requiring careful manager selection.
Excessive capital inflows into large alternative funds could dilute returns if not matched with sufficient high-quality investment opportunities.
Opportunities Identified
Capturing a significant illiquidity premium, estimated around 300 basis points per year, over public market equivalents.
Gaining exposure to major economic trends like the energy transition and AI development through private infrastructure and growth equity.
Strong client demand for yield continues to create attractive opportunities in the private credit space.
The growing secondary market provides unique entry points and liquidity options for private equity investors.