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Yahoo
5 days ago
- Business
- Yahoo
Young Investor Demand for Alternative Assets Is Reshaping Wall Street's Playbook
(Bloomberg) -- Wall Street has a new favorite investor. They're young, they're affluent and they're skeptical that traditional markets can deliver wealth over the long haul. Shaped by financial crises and fueled by tech optimism, this well-heeled class of Millennials and Gen Z are moving their money into the buzzy world of alternative assets. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice One Architect's Quest to Save Mumbai's Heritage From Disappearing NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Think pre-IPO unicorns, real estate, crypto, collectibles, and more. From private banks to fintech platforms, the financial industry is rushing to keep up. Firms like Forge Global Holdings Inc. have lowered their minimum investment thresholds, pitching private-market access as aspirational — and attainable. At Bank of America Corp., the number of retail clients holding alternative assets has more than doubled since 2020, and the firm adds about 50 new funds to its platform each year. Nearly three-quarters of wealthy investors under 43 believe a traditional stock-bond portfolio will fail to generate above-average returns, according to BofA's biennial study last year. About 93% plan to increase allocations to alternatives in the coming years. The irony for Wall Street's old guard: many in this alt-loving crowd are turning away from the very public markets that helped build their wealth in the first place. 'Investor preferences are changing at the same time that the markets are evolving,' said Michael Pelzar, head of investments at Bank of America Private Bank. 'Those two dynamics are at play that are feeding off of each other.' The demand is reshaping how Wall Street pitches wealth-generating products. What used to be institutional is now increasingly being redesigned for individuals, albeit the well-connected and well-funded. Blackstone Inc. and Apollo Global Management Inc. are among investment firms repackaging their once-elite strategies for the masses into ETFs and semi-liquid funds. The 60/40 model — allocating 60% to stocks and 40% to bonds — delivered respectable gains over much of the past decade. But its appeal has dimmed since 2022's inflation-driven rout, as both assets began moving in lockstep, eroding the diversification benefit of the strategy. 'Some advisors may have just used the 60/40 portfolio over time and haven't really felt the need to offer something in the way of alternatives,' said Mark Steffen, global alternative investment strategist at Wells Fargo Investment Institute. 'But I think that's probably changing.' Supply is on the rise. A CAIS survey shows 80% of alternative managers plan to launch retail-friendly products and structures, nearly double from three years ago. Morgan Stanley, for instance, just filed to offer a multi-asset vehicle designed to provide exposure to everything from venture capital to private debt, real estate and infrastructure — all in one fund. Many investors are opting into complex, costly, and often illiquid structures — even as the long-term payoff remains uncertain. Compared to tax-efficient ETFs, these alternative products tend to carry higher fees, greater opacity, and less liquidity. Blackstone's flagship real-estate trust, for example, hit withdrawal limits during the 2022 interest-rate spike. With private equity and credit poised to trail public markets for a third year, JPMorgan Chase & Co. strategists recently advised their clients to reduce exposure to both assets. A separate academic study has labeled alts 'costly and wasteful.' And Moody's Corp. warned the push to open private markets to the retail crowd carries 'systemic implications,' such as growing liquidity risks. Yet none of this is deterring industry fans in the era of get-rich-quick antics amplified on social media from TikTok to Reddit. 'I can tell you it's most often easier to convince an entrepreneur to put money into a 1-in-10 shot startup than it is to get them to park money in a conservative, long-term strategy,' said Brian Werner, chief investment officer at Winthrop Partners. Earlier this year, when Forge cut the minimum investment on selected offerings to $5,000, daily sign-ups more than tripled. Executives say the surge largely came from young users riding the AI wave — hoping to access firms like OpenAI before an IPO. Part of the appeal is cultural FOMO — the chance to signal early participation in the next major tech boom. 'A lot of them have a tech background, so they're playing in their own sandbox with stuff that they know,' said Andrew Saeta, co-head of US capital markets at Forge. 'The stocks-and-bonds model of our parents isn't necessarily getting the job done in their eyes, especially with everything being so expensive.' While the trend appears most pronounced among Millennial and Gen Z types, it's pulling in a broader cohort. Chad Blackburn, an accounting executive in Nashville, Tennessee, started buying equities in his teens. Today, the 45-year-old largely avoids stocks and bonds, putting most of his capital into startup firms and — yep — Bitcoin. 'The dotcom bubble and great financial crisis forced me to think more deeply about my investments,' he said. 'Why would I limit myself to just stocks and bonds, especially when a lot of this stuff is not nearly as diversified as you think?' For many, alts aren't just about returns, they're a form of rebellion. Even among those who have benefited from the market's gains, there's a lingering distrust in the institutions that helped deliver them. They view public markets and 60/40 strategies as fragile or even rigged, having coming of age during the crashes of 2008 and 2020. Real estate, digital currencies, and private equity now rank among the top picks for this emerging wealth class, according to BofA. The appeal is both psychological and financial: these assets are seen as detached from government interference and more likely to deliver big upside. 'They think, the system is rigged against me,' said Owen Lamont, a portfolio manager at Acadian Asset Management. 'I have to do something out of the box in order to get rich.' One reason that alternatives are being aggressively repackaged for individuals is that traditional buyers — pensions, endowments, insurers — risk being tapped out. Big institutions allocate about one fifth of their portfolios to alternatives, according to Preqin. By contrast, individuals in the BofA survey show an allocation of only 7%. But painting alternatives with a broad brush can be misleading. According to Chris Toomey, managing director at Morgan Stanley Private Wealth Management, private credit and infrastructure appeal to older investors thanks to the promise of steady cash flows, though for the young cohort, private equity looks more attractive. 'They are at a point in their investment cycle where they have the ability to take on that risk,' Toomey said. 'They're early investors and they've got a much longer time horizon.' Yet even among the younger generation, the shift in taste isn't universal. For every investor chasing unicorns on Forge, there are thousands of Millennial and Gen Z savers. According to Vanguard Group Inc., many in this group are sitting on high cash holdings thanks to cash-default IRAs — at the expense of fully investing their capital in diversified portfolios. There's no monolithic investor and no single truth about alternatives. But the future of wealth management won't resemble the past — and Wall Street is already rushing to profit from the generational shift. 'You've got this mix of investor preferences and product availability evolving in a way that they actually compliment each other to create this procyclical uptake in alternative investments,' said BofA's Pelzar. 'We're probably in the early innings of a real wave.' Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.
Bloomberg
5 days ago
- Business
- Bloomberg
Young Investor Demand for Alternative Assets Is Reshaping Wall Street's Playbook
Wall Street has a new favorite investor. They're young, they're affluent and they're skeptical that traditional markets can deliver wealth over the long haul. Shaped by financial crises and fueled by tech optimism, this well-heeled class of Millennials and Gen Z are moving their money into the buzzy world of alternative assets. Think pre-IPO unicorns, real estate, crypto, collectibles, and more. From private banks to fintech platforms, the financial industry is rushing to keep up. Firms like Forge Global Holdings Inc. have lowered their minimum investment thresholds, pitching private-market access as aspirational — and attainable.
Yahoo
14-05-2025
- Business
- Yahoo
Forge Global Holdings, Inc. (FRGE) Reports Q1 Loss, Tops Revenue Estimates
Forge Global Holdings, Inc. (FRGE) came out with a quarterly loss of $1.29 per share versus the Zacks Consensus Estimate of a loss of $1.34. This compares to loss of $1.50 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 3.73%. A quarter ago, it was expected that this company would post a loss of $1.35 per share when it actually produced a loss of $1.20, delivering a surprise of 11.11%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Forge Global , which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $25.3 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.27%. This compares to year-ago revenues of $19.24 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Forge Global shares have lost about 13.5% since the beginning of the year versus the S&P 500's decline of -4.7%. While Forge Global has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Forge Global: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$1.03 on $23.22 million in revenues for the coming quarter and -$4.27 on $98.57 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. StepStone Group Inc. (STEP), another stock in the same industry, has yet to report results for the quarter ended March 2025. This company is expected to post quarterly earnings of $0.46 per share in its upcoming report, which represents a year-over-year change of +39.4%. The consensus EPS estimate for the quarter has been revised 14.2% lower over the last 30 days to the current level. StepStone Group Inc.'s revenues are expected to be $235.01 million, down 34.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Forge Global Holdings, Inc. (FRGE) : Free Stock Analysis Report StepStone Group Inc. (STEP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Wall Street Journal
02-04-2025
- Business
- Wall Street Journal
Paternalism Reigns in an SEC ‘Investor' Rule
While EquityZen's and Forge Global's lowering of investment minimums represents progress, the fundamental issue remains: The Securities and Exchange Commission's accredited investor rule prohibits participation for most Americans ('Small Investors Get Access to Pre-IPO Shares,' Business & Finance, March 26). Because companies remain private for nearly 11 years before initial public offerings, most wealth creation occurs before average Americans can participate. The arbitrary accredited investor standards perpetuate a two-tiered system by which only the already wealthy can access potentially transformative investments. A truly freedom-respecting approach would focus on transparency and disclosure rather than prohibition. The current system's paternalistic approach assumes that nonwealthy Americans lack the judgment to evaluate investment opportunities. Meanwhile, these same people have unlimited freedom to give away their money or spend it on lottery tickets, casino gambling or other high-risk activities with negative expected returns. True financial freedom means respecting people's right to allocate resources according to their own priorities and risk tolerance. Some investors might prefer to put small amounts into high-potential private companies rather than public markets or consumption. The current regulatory framework doesn't protect people from making poor financial choices. It simply restricts certain choices to those who are already wealthy. Innovation is finding ways around these barriers, but comprehensive regulatory reform remains essential.
Yahoo
01-04-2025
- Business
- Yahoo
Forge Global board approves 1-for-15 reverse stock split
Forge Global's (FRGE) Board of Directors approved a 1-for-15 reverse stock split of its Common Stock to be effective 12:01 a.m., Eastern Time, on April 14, 2025. The Company expects its Common Stock to begin trading on a split-adjusted basis on the New York Stock Exchange as of the commencement of trading on April 15, 2025. On March 27, 2025, the Company's stockholders approved a reverse stock split of the Company's Common Stock at a ratio ranging from 1-for-3 to 1-for-50, inclusive, with such ratio to be determined at the discretion of the Company's Board of Directors and with such reverse stock split to be effected at such time and on such date as determined by the Board of Directors in its sole discretion. The reverse stock split is intended to bring the Company into compliance with the minimum bid price requirement for continued listing on the New York Stock Exchange. Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks. Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter. Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>> See Insiders' Hot Stocks on TipRanks >> Read More on FRGE: Disclaimer & DisclosureReport an Issue Forge Global, Yahoo Finance launch private market hub Investing In Private Companies Just Got Easier Forge Global Appoints Brian McDonald to Board Forge Global's $10M Buyback Program Faces Risks Amid Inaction and Market Uncertainty Forge Global Holdings: Positioned for Growth Amidst Cyclical Recovery and Market Advancements Sign in to access your portfolio
