To stay relevant, asset managers are moving beyond the traditional vs. alternative divide to deliver integrated, outcome-driven solutions.
In a world where investors increasingly demand more holistic, agile, and outcome-driven portfolios, the old lines between “traditional” and “alternative” asset management are rapidly vanishing. This is not merely a shift in semantics—it’s a full-fledged restructuring of the industry. And according to McKinsey & Company’s latest report The Great Convergence, it could unlock up to $10.5 trillion in “money in motion” over the next five years.
What’s driving this? Investors of all stripes—from global insurers to mass-affluent retirees—are increasingly demanding total portfolio solutions that blend the best of both worlds: the liquidity, efficiency, and transparency of public markets, alongside the return potential, diversification, and complexity premium of private assets. Welcome to the age of integration.
High Net Worth and Insurers Lead the Shift
As highlighted in McKinsey’s 2025 Asset Management study, the vanguard of this shift is being led by high-net-worth (HNW) individuals and insurers. Insurers are embedding public and private strategies into single mandates, rethinking how capital is deployed to maximize long-term yield and resilience. Meanwhile, family offices and affluent investors are increasingly turning to private markets for their long-term growth potential, especially as traditional fixed income strategies struggle to deliver real returns in a volatile macro environment.
This trend is backed by the data. In 2024, semi-liquid and evergreen vehicles attracted $64 billion in inflows from private wealth channels in the U.S. alone. Assets under management in these vehicles reached $348 billion, while secondaries raised $130 billion and surpassed $700 billion in global AUM.
Private Market Access Goes Mainstream
Wealth platforms are scaling access to private markets like never before. What began as an ultra-high-net-worth privilege has trickled down to mass-affluent investors via semi-liquid structures such as interval funds, BDCs, and private REITs. Wealth platforms are now offering model portfolios that include both public and private assets, making hybrid investing accessible at scale.
Even defined contribution (DC) plans are beginning to warm to the idea as regulations start to loosen. While allocations to private markets remain low in this segment, McKinsey sees the potential for 1–5 percentage point increases in private market exposure across the $13 trillion DC market by 2030.
Alternative managers bring alpha in private assets; traditional managers bring product scale and distribution. Few have built both organically—driving a wave of partnerships, acquisitions, and integrations as business models converge. The result allows a new wave of innovation—not just in investment products, but in how portfolios are constructed, distributed, and optimized.
From 60/40 to 60/20/20
The classic 60/40 portfolio is being rewritten. As McKinsey senior partner Ju-Hon Kwek put it, many managers are evolving to a “60/20/20” model: 60% public markets, 20% private markets, and 20% flexible or opportunistic strategies. This reflects a deepening belief in the structural role that private assets can play not just as diversifiers, but as core components of a modern portfolio.
But this evolution isn’t without growing pains. After peaking at $1.7 trillion in 2021, private markets fundraising fell to $1.1 trillion in 2024. Much of this dislocation stems from slower exits and a backlog of aging portfolios, especially in private equity and real estate. Still, infrastructure and private credit have proven more resilient, benefiting from demand for yield and exposure to “new economy” sectors like data centers and digital infrastructure.
Strategic Takeaways for Asset Managers
The implications for asset managers are profound. To win in this new environment, firms must do more than bolt on an alternatives platform or white-label a product. To stay competitive, managers continue focus on four core priorities–
- Build scalable cross-asset-class investment capabilities
- Develop flexible vehicle structures for different client segments
- Digitize distribution and deepen advisor relationships
- Simplify operations and reduce platform complexity
For many, this will mean letting go of legacy silos and embracing a modular, outcome-oriented approach. Staying competitive isn’t about creating a new box—it’s about dissolving the old ones.
Final Thoughts
The message for investors and advisors alike is clear: asset management is no longer about choosing between traditional or alternative. It’s about how well you can blend both into a unified strategy that delivers across market cycles to meet client goals.
As the integration of public and private markets continues, successful firms will be those who deliver comprehensive access, flexible product design, and clear portfolio relevance—at scale. And for investors, especially the rising class of affluent individuals seeking private exposure, the opportunity has never been more tangible.
The walls are coming down. To stay in the game and thrive, asset managers must evolve—or be left behind.