The $78 Trillion Question: How Asset Managers Can Tap Non-Bankable Assets with Assetization

Asset managers face a conundrum. Their clients seek diversification beyond traditional markets, even in times – as now – when stocks and bonds are performing well.

Beyond the bull: The quest for true diversification

Yet investors crave more: true diversification, unique opportunities, and higher returns from less efficient sectors. Many also want to align investments with personal values. This quest has led to surging interest in non-bankable assets.

Asset managers, too, are hungry for growth. They aim to expand assets under management, broaden product offerings, and capture a larger share of client portfolios. Non-bankable assets present a compelling opportunity to meet evolving client needs while driving business growth.

The $78 trillion elephant in the room

These assets represent a vast universe of value, estimated at $78 trillion by Accenture. This figure, dwarfing many national economies, represents assets held by wealthy individuals but not on asset managers' books. Often illiquid and hard to value, they pose challenges for incorporation into traditional portfolios.

The non-bankable universe spans real estate, private market investments, passion assets like fine art, impact investments, digital assets, and more. Real estate stands out as particularly significant. The global market was valued at $3.89 trillion in 2023 and is projected to grow at 9.33% annually from 2025 to 2030. For ultra-high-net-worth individuals, property comprises about half of their non-bankable assets, totalling approximately $30 trillion.

From bricks to Banksy: The diverse world of alternative assets

Private markets offer another major opportunity, including private equity, debt, hedge funds, and venture capital. These can deliver excellent returns but are often gated by high minimums and regulatory restrictions.

Passion and belief assets are gaining traction too. Fine art has outperformed many traditional investments, with contemporary art appreciating at 12.6% annually between 1995 and 2022, beating the S&P 500. Impact investing is attracting those who want to align portfolios with personal beliefs.

Alchemy for the 21st century: Turning the illiquid into gold

For asset managers, this $78 trillion pool represents a significant opportunity. By making these assets bankable and accessible, they can open new investment avenues for clients and create innovative products. This allows for differentiation in an increasingly commoditized industry.

The process of making non-bankable assets investible – which we at GenTwo call "Assetization" – is key to unlocking this opportunity. By providing tools to securitize these assets, asset managers can bridge the gap between this vast pool of value and investor demand.

The non-bankable asset universe represents not just untapped value, but a potential paradigm shift in investible assets. For asset managers willing to venture into this territory, it offers a path to innovation and growth in a competitive industry. Those who can successfully navigate this new landscape stand to reap significant rewards.

For more see:

•    What is Assetization
•    Unlocking the Vault: How Assetization is Revolutionizing Access to Private Markets
•    Top 10 Challenges Facing Today’s External Asset Managers