Beyond alternatives: redefining private market allocations

5 minutes  
Written by: Netwealth
Date: 21 September 2025

As private market opportunities expand and due diligence processes become more sophisticated, many advice firms are moving beyond the outdated label of ‘alternatives’. Instead, they’re rethinking how these assets are categorised and integrated within modern portfolios.

 

Key takeaways:

  • The explosion of private market options gives investors access to a far broader and more specialised set of opportunities than ever before
  • The outdated ‘alternatives’ label is being replaced as private markets expand, with firms now integrating these assets more strategically into portfolios
  • Private real estate opportunities are expanding beyond traditional office buildings to include high-growth areas like digital infrastructure, aged care, and even rebounding malls, offering new avenues for diversification and growth
  • Firms often use a “core and satellite” approach for private markets, grouping investments into growth assets, defensive income assets, and true alternatives

Once upon a time, everything that didn’t fit neatly into public equities or bonds got dumped into a drawer labelled ‘alternatives’. But with available options for private markets exploding, many wealth professionals are realising these old rigid labels are no longer fit for purpose. 

Instead, advice firms are challenging outdated labels like ‘alternatives’. This semantic shift reflects a deeper rethinking of how these assets are integrated into portfolios, from strategy to allocation.

Growing choice in private markets

Whereas there was once a very limited set of private market opportunities available to investors, the choice has expanded.

Paul O’Connor, head of strategy & development – investment choice at Netwealth says there’s been notable growth in offshore private credit, particularly in the US, which offers a much more diversified lending landscape. He also highlights the expansion of private equity offerings in Australia, with some managers providing private equity funds and others introducing open-ended or ‘evergreen’ options on investment platforms. In addition, there has been consistent growth in unlisted infrastructure, which plays a defensive role in portfolios due to its relatively stable cash flows and low volatility.

   

Heath Ueckermann, partner at Lipman Burgon, says his firm is increasingly active in secondaries tied to unlisted property, infrastructure, and specialised investments such as royalties in music, pharmaceuticals, and mining. He also highlights a growing opportunity in the endowment space, where major institutions like Harvard and Yale are under financial pressure and may become sellers of private assets.

Eric Greer, associate investment director for private markets in Australia at Schroders Capital, observes that liquidity constraints in legacy real estate funds are generating value opportunities in secondary markets too.

Meanwhile, Nathan Lim, chief investment strategist at Evidentia Group says private real estate is a key area of interest, but not just office buildings. He says opportunity lies in high-growth areas like digital infrastructure which includes data centres supporting AI and local warehouses for e-commerce. Another is aged care, which is increasingly in demand due to aging populations. Malls, often seen as in decline, are rebounding thanks to trends like click-and-collect - yet no major malls have been built in the US in the last 15 years, creating a premium for existing space.

Wind farms, as real assets, offer both a potential hedge against inflation and align with the global trend of decarbonisation. Nathan also mentions niche forms of lending, like student loans, equipment, finance, music, royalties, aviation leasing.

Is alternatives still fit for purpose?

With such market growth has come a rethinking of how to classify these assets in portfolios. For many wealth professionals, the term ‘alternatives’ misrepresents the effort they go to do research and assess opportunities, plus the nature of the investment itself, including the level of risk.

“Equity is equity, whether it’s public or private. And equity is going to be impacted by the economic cycle,” Heath says, confirming their firm is moving away from the alternatives classification.

Charlie Viola executive chair and founder at Viola Private Wealth agrees the term ‘alternatives’ has been increasingly replaced with ‘private markets’ in portfolios, as “when you say alternatives people think Guatemalan coal mine.”

“We started using the term private market investments because we still have to do a lot of due diligence on those investments,” he explains.

Core and satellite

As they move away from a blanket classification of alternatives, advice firms often use a mix of core and satellite strategies when thinking about portfolio construction and private markets.

Heath says they typically group investments into three broad categories. The first is growth-oriented assets, which includes both public and private equity, as well as real assets like infrastructure and real estate, regardless of whether they’re listed or unlisted.

The second category comprises defensive, income-oriented assets, such as debt and cash, primarily used for income generation and downside protection.

Finally, there is a sleeve for true alternatives; in other words strategies or assets that are uncorrelated with traditional equity and fixed income markets. These might include investments like royalties, hedge funds, and trend-following strategies.

“We define these as alternatives because their behaviour is independent of the typical market cycle,” Heath explains.

Heath says only around small percent of clients, typically the more sophisticated or high-net-worth individuals, are suited to these most opportunistic parts of the portfolio.

“We know which clients we can take these to,” says Heath. “We know who can understand and stomach the illiquidity, and who has room in their portfolio for them.”

Position sizing is central to that philosophy. The team allocates more capital to investments with high certainty and predictable cashflows, while higher-risk, less liquid opportunities receive smaller weights.

“These opportunistic investments usually only make sense in larger portfolios,” Heath explains. “Self-funded retirees with $7–9 million are unlikely to see allocations here, whereas for family office clients, it’s a key part of the value proposition.”

Vincent O’Neil, CEO of Stanford Brown adds that within each asset class, they consider not just the sector, but the strategy type, such as core and core-plus/value-add.

“In credit, core strategies might include straightforward corporate lending, while higher-return strategies like distressed debt involve more risk. In real estate and infrastructure, it’s the same: core investments aim for stable income, while value-add strategies involve active development or repositioning to capture upside.”

“Generally, if available, we try to have core investment solutions for say, private equity funds, private credit, global domestic and Infrastructure and real estate,” he adds.

Viola Private Wealth refer to ‘core alternatives’ and ‘satellite alternatives’.

They will typically allocate around 60–65 per cent to traditional assets and 35–40 per cent to private markets. He explains that they structure portfolios across three distinct buckets: traditional core assets like equities or long bonds, core alternatives which are evergreen, semi-liquid assets where clients can access money more readily, and satellite alternatives.

“What we’ve done over the years is we’ve built up that second bucket – the core alternatives bucket,” he says.

“We’ll only put money in the satellite alternatives bucket if there is a justification for pulling money out of something else,” he adds.

As private markets evolve in scale and complexity, the language used to describe them is also shifting. The catch-all term ‘alternatives’ no longer reflects the strategic role these assets play in portfolios.

Advice firms are adopting more nuanced classifications which differentiate between growth, defensive, and uncorrelated strategies in order to better match client needs and risk profiles. This reframing is not just semantic; it marks a fundamental shift in how private assets are integrated into long-term investment thinking. For those looking to build more resilient, differentiated portfolios, rethinking the labels may be the first step toward unlocking the full potential of private markets.

For more information on how to get started with private markets, check out Netwealth’s special reports, Unlocking Private Markets, Building your value proposition with private markets, and The advanced playbook to private markets.

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