Fall 2022

Democratizing Alts: Providing Greater Access to Private Markets

Traditionally, private markets and other Alternative exposures have been limited to pension plans and institutional investors. However, shifting dynamics in public markets, elevated uncertainty and enhanced product design, have accelerated the democratization of Alts to a broader pool of accredited investors.

Oct. 19, 2022

Expanding access to Alternatives

An emergent theme in recent years has been the migration of institutional investors’ assets from public to private markets. Allocation to these walled gardens — via hedge funds, venture capital, private equity, private credit, real estate and infrastructure — currently accounts for approximately 30% of public pension plan allocations. 

Bringing Alts to the asset mix represented a concerted effort to strengthen portfolio construction. Better diversifiers were needed and, as so often occurs, change began at the institutional level. 

Now access is being democratized for the benefit of family offices and ICPMs. 

The next phase of Alternatives adoption 

Imagine the ability to invest in venture capital funds, private equity or credit without submitting a multi-million-dollar ticket. The next phase of Alts access will likely make this possible for new populations of investors, unlocking satellite positions to complement core equity and fixed income. 

Portfolio managers who are concerned about the volatility of public markets can, for instance, enhance risk-adjusted returns if they are willing to allocate to strategies with limited liquidity. 

Previously, fears of capital lock-ups and logistical challenges deterred interest in Alternative asset classes. But there has been a shift in portfolio construction — using a total portfolio approach, liquidity is managed at the portfolio level rather than at the individual fund level, allowing advisors to invest a portion of their portfolios in longer-term assets with the expectation of illiquidity premium. 

Family offices that deal with intergenerational wealth may find this especially true as preservation of capital becomes a more vital theme and time horizons are stretched. 

Imagine the ability to invest in leveraged buyouts or venture capital funds without submitting a multi-million-dollar ticket.

Many family offices are already embracing opportunities now that the vehicles are more manageable. A recent survey showed 46% of Advisors polled believe that private equity will be the fastest growing Alternatives strategy in the market, more than even digital assets.1 But when asked about the greatest challenges for allocating to Alts, investors’ education is among the top concerns given that they are often complex and different from traditional products.

For end clients to understand Alts and what they offer is essential. Though private markets products are becoming more accessible, product education is essential to increase comfort from both the advisor and the investor. This can be burdensome – particularly as managing know-your-product (KYP) requirements alone can be extremely time-consuming. 

How we are supporting the transition 

With BMO GAM, family offices receive the foundational support needed to execute an Alts strategy. Our team is familiar with the challenges typically encountered by wealth managers, and have the expertise in-house to guide them through the process. 

We have also launched a new Alternatives team with the purpose of being a premier provider of Alts solutions in Canada. We are using our internal strengths to bring products to market that we have a right to own — which may include leveraging our impressive history as a credit underwriter, as well as our relationships with niche asset managers who are leaders in their space. Where we don’t have expertise, we are accelerating partnerships to bring leading solutions to clients. 

We have also launched a new Alternatives team with the purpose of being a premier provider of Alts solutions in Canada.

Building trust is a clear first towards achieving our aims. As a bank-owned asset manager with a 200+ year heritage in serving Canadians across their financial needs, BMO GAM brings a measured approach in selecting the products, strategies and partnerships it offers for investors. 

We look forward to helping guide our investor clients on their journey to attain the same tools for diversification that institutions have long enjoyed.

To learn more about our Alternatives capabilities, please contact your BMO ETFs Institutional Specialist.

1 AIMA Canada, Evolution of Alternative Investments in Canada & the Advisor Opportunity.” 


Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

The viewpoints expressed by the authors represents their assessment of the markets at the time of publication. Those views are subject to change without notice at any time without any kind of notice. The information provided herein does not constitute a solicitation of an offer to buy, or an offer to sell securities nor should the information be relied upon as investment advice. Past performance is no guarantee of future results. The statistics in this update are based on information believed to be reliable but not guaranteed.

This article is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated.

For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the prospectus. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/​or elimination.

BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and a portfolio manager, and a separate legal entity from Bank of Montreal.

BMO Global Asset Management comprises BMO Asset Management Inc. and BMO Investments Inc.

®/™Registered trademarks/​trademark of Bank of Montreal, used under licence.