2025 | the year in review
From niche to necessity: alternatives enter the mainstream
By Dino Zuccollo, Head of Investor Solutions
The Year in Review is an excellent opportunity to pause, reflect and take stock. In some years, identifying key themes has been challenging, drowned out by the “noise” of being busy.
2025 was different. For Westbrooke, one theme rose above all others, dominating the narrative and setting the tone for the year.
Alternatives are now too big and too important to ignore
McKinsey’s Asset Management 2025 report identifies “the great convergence” of traditional and alternative asset management as the industry’s dominant theme over the next five years, with the high net worth segment ($1 million+ in investable assets) expected to drive most of that shift.
High net worth allocations to alternatives have increased from c.3% a decade ago to 16% today. Bank of America now regards 25% as the optimal target for most wealthy families. Despite the magnitude of this shift, the figure remains approximately half of the 44–54% which family offices currently allocate.
In the United States, private companies generate 50–60% of total corporate revenue. Companies are staying private far longer (the average age at IPO has risen from eight years in 2004 to fourteen years in 2024) and in the listed markets, the Magnificent 7 now account for c.35% of the entire S&P 500 market cap. The reality is that the public investment universe is small and becoming increasingly concentrated.
In South Africa, every investment event I have attended this year has had one or more sessions dedicated to alternatives; be it how to access them, evaluate them, incorporate them in legacy 60/40 portfolios, compare them to traditional markets and many more. This is in stark contrast to years gone by when alternatives didn’t even make it onto the agenda…
Mainstream adoption has, of course, brought fierce competition and compressed returns in large-cap private markets. It is for this reason that Westbrooke has stayed disciplined in our lower and middle market focus, where competition is lighter, pricing remains attractive, and risk/return asymmetry is materially better.
For over 20 years we have built a global platform and a robust investment process which has been proven through multiple cycles and macro conditions. This gives our clients unique access to the long-term compounding potential that only disciplined private market investing can deliver — we call this The Westbrooke Advantage.