Demand for alternative investments across retail and institutional channels is on the rise, driven by platforms that expand access to wealth managers and liberalized regulations for private pensions, according to The Cerulli Report—Latin American Distribution Dynamics 2024.

The appetite for alternative investments has been growing for some time among pension funds in Latin America that can invest in the asset class. More recently, however, wealthy individuals are also warming to products such as private equity and private debt as a complement to their portfolios amid concerted efforts by marketers and platforms to expand access. Wealthy individuals in the Latam region poured at least $1 billion into alternative products sold via U.S. offshore-based wealth managers in 2023—a figure that is expected to easily double in 2024.

“Global managers with alternatives products in their toolkit should strongly consider adding these products to their Latin American offerings, as intermediaries, especially boutique advisors, multi-family offices, and broker/dealers, are increasingly promoting these vehicles to their affluent clients,” says Thomas Ciampi, Founder and Director of Latin Asset Management.

While investment regimes of private pension systems of Latin America are tightly regulated, limits on alternatives have been liberal, as governments see these vehicles promoting investment in local industry, infrastructure, and real estate. Pension systems in the Andes and Mexico held more than $71 billion in alternatives, including local vehicles, at the end of 2023. That figure represents a sharp increase compared to the $46 billion in alternatives exposure across the Andean AFPs and Mexican Afores in 2020.

As alternative providers look for ways to penetrate both investor types, gaining placement on platforms that are widely accessed by financial advisors will be critical to attracting retail assets. For pension funds, Ciampi advises managers to be as competitive on liquidity and gate provisions as they are on the fund’s investment strategy, given the increased flexibility alternatives providers are promoting.