Wellington Management, the storied firm with $1.1 trillion in assets, has somewhat quietly grown its alternative investments business. Now it’s giving that unit a global boost by partnering with iCapital, a platform financial advisors use to invest in private equity, hedge funds, and other strategies.
Investors of all types are worried that the decades-long success of a plain vanilla portfolio — 60 percent in stocks and 40 percent in bonds — is subsiding so they are allocating more to alternative investments. But while institutional investors and family offices are already heavily invested in alternatives, most financial advisors and their retail clients are not. Investing in alternatives also requires expertise and time, which many wealth managers don’t have, so they are turning to platforms like iCapital to help build portfolios. Meanwhile, asset managers like Wellington are hoping to attract some of the money from more mainstream investors by partnering with iCapital. The platform, founded in 2013, services $166 billion in assets.
“Our partnership with iCapital allows us to meet our clients’ growing appetite for alternative investments,” said Michael Carmen, private equity lead portfolio manager and co-head private investments at Wellington Management.
Wellington has been building an alts business since the 1990s. But like other traditional asset managers, it has been aggressively growing it in recent years. Today Wellington has $32 billion in hedge fund and private equity assets across more than 35 strategies, including long-short equity, long-short credit, emerging markets macro, and late-stage private equity. It also has a fintech fund that invests in both public and private companies.
The partnership with iCapital will boost the distribution of Wellington’s strategies in North America as well as markets in Asia, Europe, the Middle East, and Latin America.
Before the COVID-19 pandemic, Mark Sullivan, team leader of global macro and fixed income and head of hedge fund and liquid alternative strategies at Wellington, was tasked with evaluating the firm’s alts business. In a sentence, his review was that it could be bigger and better and that it needed more of a top-down strategy. Better distribution to wealth managers through iCapital could help it achieve that.
“Alternative investments are a strategic priority for our wealth management partners,” said Cindy Marrs, head of global wealth management at Wellington. “Delivering our investment solutions in an efficient and accessible manner is a key part of helping our end beneficiaries meet their financial goals. “