Present-day portfolios have undergone a significant change in their construction. What used to be a small part of finance that only institutions and the wealthy could access has grown into a $20 trillion market that is changing how advisors think about asset allocation, speaking to clients, and their own professional skills. There is a silent revolution going on: the gap between public and private markets is becoming less clear at a speed that few expected. Changes in access to information, rules, and a once-in-a-generation cycle of capital spending related to AI infrastructure and the switch to sustainable energy are all to blame for this. The question is no longer whether to use alternatives but how to do it wisely and at scale.
The results of the 2025–26 CAIS-Mercer study of around 800 financial advisers tell a clear story: nine out of ten advisors already invest in alternatives, and 88% aim to increase such investments over the next two years. This is the fourth year in a row that advisors have said they want to do this. About half of advisers now put more than 10% of their clients’ portfolios into alternatives. This indicates that alternatives are now a key part of diversified wealth plans. Private debt (89%), private equity (86%), and real estate (85%) remain the top asset classes advisors are currently allocated to, while more than half expect to increase infrastructure allocations — up from just 32% in 2023. These are not small changes. These changes indicate the need for a re-evaluation of the structure.
The reasons for investing have become much clearer. Inflation came back in the early 2020s, which showed how weak the typical 60/40 portfolio was, especially the way bonds have always been a reliable way to spread out risk, leading investors to seek alternative investment strategies that could provide better returns and diversification. At the same time, it has become harder to make money in public equity markets since they are becoming more efficient and connected, leading investors to seek alternative investment strategies such as private equity, which has shown significant growth and returns in recent years. Over $1.3 trillion in private equity transactions occurred in the first three quarters of 2025. Growth, value creation, and deal exits were driven by the AI and healthcare industries, particularly as advancements in technology and increased healthcare needs have led to innovative solutions and investment opportunities. At the same time, the private credit market has increased from $250 billion in 2007 to $2.5 trillion now. This has created a lot of new opportunities for disciplined investors as demand rises, particularly in sectors such as technology and healthcare where innovative solutions are in high demand. Infrastructure is also seeing a rise. As artificial intelligence and data growth happen quickly, the need for stronger power generation and distribution is growing swiftly. Data centers are expected to triple their power requirements by 2030, necessitating significant new investment. Advisors that work with clients who have real assets or infrastructure funds should definitely talk about these macro tailwinds.
