From Knowledge to Growth: The Advisor Advantage in Alternatives

The Broader Your Perspective, The Greater Your Clients’ Opportunities: Advisor Education in Alternatives as the Catalyst for Wealth Creation in Developing Markets

Executive Summary

Alternative assets—private equity, private credit, real estate, infrastructure and hedge funds—have become an essential source of return, income and diversification for institutional portfolios in developed markets. Yet across many emerging markets the share of alternatives in retail and mass‑affluent portfolios remains stuck at low single‑digits. Research from CAIA and McKinsey notes that retail investors globally hold about 2 % in alternatives, though this share is expected to more than double in the next few years. In Latin America, cross‑border allocations by pension funds rose 24 % in 2023, but the USD 20 billion captured by exchange‑traded funds (ETFs) represents only a small fraction of total AUM, and Mexico’s Afores (pension funds administrators) —despite regulatory reforms—have been hesitant to increase exposure to cross‑border mutual funds. Middle Eastern family offices allocate a higher share to alternatives than the global average—about 15 % to real estate and 28 % to private equity. —yet investments are concentrated in a handful of sectors. Central and Eastern Europe (CEE) saw private‑equity and venture‑capital investment surge 50 % to €2.83 billion in 2024, but the region’s alternative AUM still equates to only 0.112 % of GDP, roughly one‑fifth the European average. These figures illustrate both the potential and the urgency of broadening advisor knowledge in alternatives.

Barriers are as much educational as structural. Many financial advisors in developing markets were trained within a traditional 60/40 framework and lack the tools and confidence to recommend private‑market strategies. Regulatory caps, illiquidity concerns and opaque fee structures further restrict access. This whitepaper argues that advisor education—supported by transparent data, digital innovation and thoughtful regulation—is the catalyst that can unlock wealth creation for clients in developing markets. Drawing on examples from Latin America, the Middle East and Central/Eastern Europe, we explore how an expanded perspective can help advisors navigate alternatives more effectively, generate superior client outcomes and support the democratization mission of LYNK Markets.

Introduction: Why Perspective Shapes Client Outcomes

In mature markets, institutional investors have been steadily increasing their allocations to private markets. Private equity and private credit have delivered risk‑adjusted returns that often exceed public markets, while real assets and infrastructure provide inflation protection and diversification. A CAIS/Mercer survey reports that 92 % of U.S. financial advisors already incorporate alternatives and 91 % plan to increase allocations in the next two years, underscoring the mainstreaming of the asset class. By contrast, retail investors globally allocate only about 2 % to alternatives, leaving portfolios heavily skewed toward domestic bonds and public equities. This disparity highlights a knowledge and access gap—one that is particularly wide in developing markets.

Latin America: Rising interest, limited penetration

Latin America is a region of contrasts. Sovereign wealth funds and institutional investors have been investing in infrastructure, private equity and private credit for years, yet retail and mass‑affluent clients remain under‑exposed. According to Cerulli Associates, wealthy individuals in Latin America invested at least USD 1 billion via U.S. offshore alternative platforms in 2023, and this figure is expected to double. Pension systems across the Andes and Mexico held over USD 71 billion in alternative assets at the end of 2023—up from USD 46 billion in 2020.—reflecting growing institutional interest. However, cross‑border fund allocations are still modest: total cross‑border pension allocations to international securities rose 24 % in 2023 to USD 212 billion, yet ETFs captured just USD 20 billion of new flows, while cross‑border mutual funds actually lost assets.  Mexican Afores remain cautious, focusing on long‑term private equity and real estate deals rather than diversified mutual fund strategies. These data points underscore that despite product innovation and regulatory liberalization, alternatives still represent a low single‑digit share of Latin American portfolios.

Middle East: Concentrated allocations and cultural nuances

In the Middle East, family offices and sovereign wealth funds have long embraced alternatives. A CFA Institute survey found that Middle Eastern family offices allocate 15 % of portfolios to real estate and 28 % to private equity, compared with global averages of 10 % and 22 % respectively. However, these exposures are often concentrated in specific sectors—particularly regional real estate development and late‑stage private equity—leaving portfolios vulnerable to sector cycles. Islamic finance principles further complicate asset selection: many investors avoid conventional fixed income in favor of Sharia‑compliant instruments, limiting diversification. As a result, even though alternatives form a larger proportion of Middle Eastern portfolios, there remains a need for education on diversification, risk management and emerging structures (such as private credit and infrastructure funds) that align with local values.

Central and Eastern Europe: Growing momentum from a low base

Central and Eastern Europe has seen a remarkable rebound in private‑equity and venture‑capital activity. According to Invest Europe, investment in the region rose 50 % to €2.83 billion in 2024, with buyouts up 79 % and fundraising up 66 %. Venture‑capital fundraising tripled to €657 million. Nevertheless, CEE’s share of total European private‑market investment value remains tiny—2.2 %—and private‑equity investment equated to 0.112 % of regional GDP, about a fifth of the European average. This suggests substantial headroom for growth, provided advisors can access the right products and clients understand the benefits of cross‑border diversification.

The Alternative Investment Knowledge Gap

Low market penetration

The limited share of alternatives in emerging‑market portfolios stems from a confluence of structural, behavioural and informational factors. Data collection is patchy—many regulators do not require detailed reporting of alternative holdings. In Africa, an International Finance Corporation (IFC) study found that pension funds allocate between 0 % and 2.7 % of assets to local alternatives. While this illustrates the extreme end of under‑allocation, similar data gaps exist across Latin America and the CEE region. Without consistent benchmarks, advisors struggle to evaluate strategies or justify allocations.

Mindset and education

Many advisors in developing markets were trained to implement the classic 60/40 portfolio—60 % public equity, 40 % bonds—and have limited exposure to private markets. In a survey of U.S. advisors by CAIS and Mercer, nearly 30 % reported feeling unprepared to evaluate alternatives despite rising client demand. In Latin America and the Middle East, myths persist that alternatives are only for ultra‑high‑net‑worth individuals or that illiquidity is incompatible with client needs. Advisors often lack access to objective research, due‑diligence tools and real‑time data. Furthermore, language barriers and region‑specific regulations complicate adoption: due‑diligence materials are often available only in English, while local advisors must interpret complex offshore structures for their clients.

Regulatory and structural barriers

Regulatory frameworks in emerging markets can be both enabling and restrictive. In Latin America, pension regulators historically imposed tight caps on private equity and infrastructure investments. While reforms now allow Afores and Chilean AFPs to invest in cross‑border UCITS vehicles and ETFs, administrative hurdles remain. Cerulli notes that cross‑border funds are registered in about ten countries on average, and only 30 % are marketed in more than fifteen countries. This limits product availability for advisors. In the Middle East, Sharia‑compliant regulations restrict the use of conventional debt, requiring advisors to find alternative structures that deliver similar risk‑return profiles. In CEE countries, regulatory regimes vary widely, and local investor protection rules often discourage retail participation in private funds.

Fees, transparency and trust

Illiquidity and complex fee structures remain major concerns. Morningstar’s analysis of semiliquid funds—interval funds designed to provide regular liquidity while holding private securities—shows that only three of 14 semiliquid private equity and venture‑capital funds have beaten the S&P 500 since inception, yet fees are two to three times higher than those of open‑end funds. Many private‑credit funds levy incentive fees even when returns are negative. Without standardized disclosure, advisors cannot easily compare products. The Institutional Limited Partners Association (ILPA) reporting template, updated in January 2025 and adopted by roughly half of the market, is a step toward transparency. However, adoption is uneven across regions. The CFA Institute notes that increased disclosure can improve investor relationships and risk management but may impose higher administrative costs. Advisors need digital solutions—dashboards, APIs and tokenized ledgers—to automate reporting and build trust.

Global Trends vs. Emerging‑Market Adoption Realities

Explosive growth globally

Preqin projects that global alternative assets under management will grow from USD 16.8 trillion in 2023 to over USD 29 trillion by 2029. Private debt is expected to reach USD 2.64 trillion by 2029, while the secondaries market could expand at an annual rate of 13.1 %. Institutional investors are increasingly using private markets to hedge inflation, enhance yield and pursue differentiated alpha. Retail access is also expanding semiliquid interval funds have grown from USD 2.8 billion to USD 96.2 billion over the past decade, with more than 70 new funds launched. Advisors in mature markets are responding—92 % incorporate alternatives, and 91 % plan to increase allocations.

Latin America: Momentum but low penetration

Latin America is starting to catch up. As noted, cross‑border allocations rose 24 % in 2023, yet the absolute amounts remain small relative to total pension assets. Wealthy individuals and multi‑family offices are increasingly using digital platforms to invest in offshore alternatives. Cross‑border ETFs have gained traction because they offer liquidity and transparent pricing. However, many advisors remain cautious: some pension funds emphasize local infrastructure and private‑equity projects due to political mandates, while others are deterred by high local yields that make offshore returns less appealing. Education on risk diversification—especially the importance of currency, legal jurisdiction and sectoral balance—is essential to broaden adoption.

Middle East: High allocations but concentration risk

The Middle East’s higher allocation to private markets can mask underlying vulnerabilities. Family offices and sovereign funds allocate substantial capital to real estate and private equity,  but exposures are concentrated in domestic property and late‑stage deals. Portfolio diversification across sectors, geographies and structures (e.g., private credit, infrastructure debt, venture capital) remains limited. Advisors must navigate not only Sharia compliance, but also economic cycles tied to oil prices and regional politics. The result is a paradox: alternatives are mainstream in the Middle East, but portfolios may not be resilient to market shocks. Advisors need education to understand global opportunities—such as European mid‑market private credit or Asian secondaries—and to communicate these benefits to clients.

Central and Eastern Europe: Under‑penetrated but poised for growth

Central and Eastern Europe has made strides in fundraising and investment activity. Buyouts rose 79 % in 2024, venture‑capital fundraising tripled, and total private‑equity and venture‑capital investment reached €2.83 billion.Yet the region accounts for only 2.2 % of European investment value and 1.2 % of fundraising, with private‑equity investment equating to 0.112 % of GDP. Many advisors and clients remain unfamiliar with private‑market vehicles, relying on public‑equity funds and bank deposits. There is a growing recognition that cross‑border diversification can enhance returns and reduce volatility. As EU regulations harmonize capital‑market rules, advisors will need to incorporate international products and adopt new risk‑evaluation frameworks.

A note on Africa

While this paper focuses on Latin America, the Middle East and Central/Eastern Europe, Africa remains a cautionary tale and a long‑term opportunity. IFC research shows that African pension funds allocate between 0 % and 2.7 % to local alternatives. Botswana invests nearly 8 % of assets in alternatives, but almost all of that capital is placed offshore. These figures demonstrate both the potential and the need for sustained education and regulatory reform. Lessons from Africa underscore why advisors elsewhere must act now—before capital markets mature and opportunities slip away.

Technology and Tokenization: Breaking Barriers

Digital innovation is democratizing access to private markets.  Tokenization—the representation of asset ownership on a distributed ledger—enables fractional ownership, 24/7 trading, automated compliance and transparent record‑keeping. Studies by Boston Consulting Group and Citi suggest that tokenized real‑world assets could reach USD 4 trillion to USD 16 trillion by 2030. Benefits include lower minimum investments, faster settlement and improved auditability. For advisors, tokenization provides an efficient way to onboard clients into private funds without cumbersome paperwork. It also facilitates global distribution, allowing investors from multiple jurisdictions to subscribe through a single ISIN‑equivalent token.

Case study: Hamilton Lane’s Secondary Fund VI feeder. Securitize tokenized a feeder fund into Hamilton Lane’s secondary fund, reducing the minimum investment from USD 5 million to USD 20 000. Using a compliant token structure and USDC settlement, the platform enables investors from various regions to subscribe seamlessly. Advisors can now offer institutional‑grade secondaries to clients without requiring large tickets or lengthy subscription processes.

Case study: Brazil’s AmFi. The Brazilian tokenization platform AmFi structured over USD 300 million in private‑credit tokens and estimates the domestic private‑credit opportunity at USD 2 trillion. Tokenization reduced issuance and distribution costs by up to 38 %, enabling fractional ownership and greater transparency. Supported by progressive regulation from the CVM and the central bank, Brazil has become a benchmark for regulated tokenization. Advisors in Latin America can leverage these digital rails to provide clients with locally originated, high‑yield private‑credit opportunities that would otherwise be inaccessible.

Digital marketplaces. Platforms like iCapital and SEI Access integrate subscription processing, KYC/AML workflows, and due‑diligence tools. SEI Access highlights that advisors who fail to offer alternative investments risk losing clients and notes that its digital platform provides e‑signature workflow and educational tools to simplify adoption. iCapital hosts hundreds of asset managers and thousands of financial advisors, providing curated product lists, automated document generation and performance analytics. These platforms enable smaller advisors in Latin America, the Middle East and CEE to access institutional strategies without building internal operations.

Regulatory Landscape and Market Frictions

Regulation is evolving but remains uneven. The ILPA fee and performance reporting template, updated in January 2025, has been adopted by around half of market participants. Adoption is critical for advisors seeking reliable data across jurisdictions. The CFA Institute emphasizes that enhanced transparency improves investor relationships and risk management, though it may increase administrative cost. Technology can mitigate these costs by automating data collection and reporting via APIs.

Latin America

Latin American regulators are modernizing frameworks to encourage cross‑border capital flows.  Mexico’s Afores can now invest in UCITS funds and foreign ETFs, though certain political and liquidity considerations limit uptake.  Brazil has introduced regulatory sandboxes to test tokenization and fintech models; the central bank and the Comissão de Valores Mobiliários (CVM) have issued guidance on digital securities, enabling platforms like AmFi to operate.  Chile implemented a Fintech Law in 2023 requiring registration and promoting open finance; regulators plan to launch an Open Finance System (OFS) in 2026. These reforms signal that regulators are aligning with global standards while safeguarding investors.

Middle East

Across the Middle East, regulators are promoting Sharia‑compliant private‑market structures. The UAE’s Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) have launched fund passports and venture‑capital frameworks. Saudi Arabia’s Capital Market Authority allows qualified foreign investors to participate in local private funds, provided they meet Sharia requirements. These frameworks open doors for international managers but require advisors to understand complex compliance rules. Education programs run by the CFA Institute and CAIA Association in Dubai, Riyadh and Abu Dhabi have expanded to address these needs.

Central and Eastern Europe

The European Union’s Capital Markets Union agenda seeks to harmonize fundraising rules and encourage cross‑border investment. While most EU member states have adopted AIFMD (Alternative Investment Fund Managers Directive) and MiFID II, implementation varies. In several CEE countries, burdensome taxation and weak investor‑protection laws limit domestic private‑fund launches. However, European long‑term investment funds (ELTIFs) are gaining traction as a semi‑liquid vehicle that can be marketed across the EU. Advisors in CEE can leverage ELTIFs to offer diversified private‑equity and infrastructure exposures while meeting retail suitability criteria.

Action Framework: Building Competency & Courage in Alternatives

Bridging the knowledge gap requires a multi‑pronged approach that addresses education, access, technology and culture. Below is a suggested framework for advisors and wealth managers in developing markets.

1. Structured Education and Certification

• Pursue formal training: Programs like the CAIA Association’s Fundamentals of Alternative Investments offer a client‑focused, holistic understanding of private markets, risk characteristics and portfolio integration.  Such programs are crafted with contributions from asset and wealth‑management experts.
• Specialize by region and asset class: Latin American advisors should learn about cross‑border funds, private credit and tokenized real assets. Middle Eastern advisors need expertise in Sharia‑compliant structures, venture capital and global private‑credit funds. CEE advisors should focus on European fund structures (e.g., ELTIFs) and due‑diligence frameworks.
• Leverage tiered learning: As Escalent notes, education should be tiered—basic modules for non‑users of alternatives, intermediate modules for “light users” (1‑9 % AUM in alternatives), and advanced modules for heavy users (10 %+ AUM). Advanced content should cover due diligence, fee structures, taxes and operational burden.

2. Enhance Data Transparency and Analytics

• Adopt standardized reporting: Encourage managers to adopt the ILPA template for fee and performance reporting.Use due‑diligence questionnaires and dashboards to compare products across jurisdictions.
• Integrate digital analytics: Employ platforms that provide real‑time pricing, cash‑flow modelling and scenario analysis. Interactive dashboards can help clients understand how private funds fit into their broader portfolios and what risk premium they provide.
• Collaborate with fintech partners: Data providers and tokenization platforms can offer APIs that feed directly into an advisor’s CRM, automating tax reporting and KYC/AML processes. This reduces operational friction and fosters trust.

3. Leverage Technology and Tokenized Solutions

• Utilize digital marketplaces: Platforms like iCapital and SEI Access offer curated lists of alternative strategies, simplified subscription flows and educational modules. These platforms empower advisors to scale their alternative offerings without building in‑house infrastructure.
• Embrace tokenized feeders: Use tokenized feeder funds to access institutional vehicles with lower minimums and transparent settlement. Products like Hamilton Lane’s tokenized feeder and Brazil’s tokenized private‑credit notes demonstrate how technology can democratize access.
• Experiment through sandboxes: Participate in regulatory sandboxes (e.g., Brazil’s CVM sandbox or the UAE’s ADGM RegLab) to test new distribution models and gather feedback from regulators.

4. Advocate for Regulatory Harmonization

• Engage with policymakers: Advisors should provide feedback to regulators on exposure caps, reporting requirements and product approvals. In Latin America, advocacy can focus on lifting caps for infrastructure funds and clarifying guidelines for tokenized securities. In the Middle East, advisors can advocate for unified Sharia standards across jurisdictions. In CEE, industry bodies can lobby for tax incentives that encourage domestic private‑fund launches.
• Support cross‑border fund passports: Encourage adoption of frameworks like ELTIF, UCITS and fund passports that allow marketing across multiple countries. This broadens the product set available to clients and reduces duplication of due diligence and KYC.

5. Foster Cultural and Behavioral Change

• Educate clients on illiquidity premiums: Many investors equate liquidity with safety. Advisors need to explain the rationale for committing capital to less liquid strategies, highlighting the historical outperformance of private markets and the importance of diversification.
• Build trust through transparency: Communicate regularly about performance, fees, and risks. Use standardized reporting and independent third‑party valuations to instill confidence.
• Emphasize long‑term goals: Alternatives are best suited for long‑term objectives such as retirement, legacy planning and intergenerational wealth transfer. Advisors must align investment horizons with client goals and manage expectations around drawdowns and liquidity windows.

Case Studies & Data Visuals

Latin America

Cross‑border pension diversification. Pension systems in Mexico and the Andes have gradually increased exposures to cross‑border alternatives. In 2023, total cross‑border allocations reached USD 212 billion, but this represents a small share of total AUM. ETFs captured USD 20 billion of flows. Advisors are using digital marketplaces to access private‑equity and real‑estate funds denominated in U.S. dollars. However, regulatory prudence and high local bond yields mean adoption remains measured.

Tokenized private credit in Brazil. The AmFi platform’s success highlights how technology can bridge gaps. By tokenizing private‑credit deals, AmFi reduced distribution costs by up to 38 % and attracted investors with minimums as low as USD 500. This case demonstrates that local issuers can tap a USD 2 trillion market opportunity.

Middle East

Family‑office diversification. Middle Eastern family offices allocate 15 % to real estate and 28 % to private equity. The challenge is to broaden exposures beyond domestic property and late‑stage private equity. Advisors are starting to recommend global private‑credit funds and secondaries to clients seeking yield and diversification. Regulatory frameworks in ADGM and DIFC support international fund registrations, enabling greater choice.

Sharia‑compliant venture capital. Interest in venture capital is growing as Gulf economies diversify away from oil. Funds structured as mudaraba or musharaka (profit‑sharing partnerships) provide Sharia‑compliant exposure to early‑stage companies. Advisors must learn to evaluate start‑up risk and navigate differences between conventional and Islamic financing.

Central and Eastern Europe

Private‑equity and venture‑capital growth. Investment in the region surged to €2.83 billion in 2024 and venture‑capital fundraising tripled. Yet adoption remains low relative to GDP.Cross‑border platforms are introducing ELTIFs and feeder funds that allow investors to allocate small tickets to international private‑equity vehicles. Advisors must educate clients on currency risk, legal structures and exit timelines.

Infrastructure and energy transition. EU funds for renewable energy and infrastructure are increasingly accessible through public‑private partnerships. CEE countries are beginning to tap these opportunities, and advisors can position clients in infrastructure debt funds that support the region’s energy transition.

Conclusion and Call to Action

The democratization of private markets hinges on education. Advisors in Latin America, the Middle East and Central/Eastern Europe stand at a crossroads: the wealth of their clients will depend on whether they embrace alternative assets and the digital tools that make them accessible. Globally, alternatives are booming, but without local advisor engagement, emerging‑market investors will miss out on diversification, yield and long‑term growth.  LYNK Markets aims to bridge this gap by providing transparent, Private ETNs access to alternative strategies and offering educational resources that empower advisors.

To seize this opportunity, advisors must commit to continuous learning, adopt technology, advocate for fair regulation and cultivate trust. Institutional managers and fintech platforms should support this journey by offering accessible products, transparent reporting and region‑specific education. Policymakers can accelerate change by harmonizing rules, encouraging cross‑border fund passports and fostering innovation sandboxes. Together, these actions will unlock the latent potential of emerging markets and ensure that a broader perspective truly translates into greater opportunities for clients.

Key Takeaways

1. Alternatives remain under‑represented in emerging‑market portfolios, with Latin American, Middle Eastern and Central/Eastern European investors typically holding low single‑digit allocations. Improving penetration requires advisor education, regulatory reforms and access to transparent products.
2. Data and transparency are critical. Advisors need standardized reporting (such as the ILPA template) and digital dashboards to compare products and manage client expectations.
3. Technology can democratize access. Tokenization and digital marketplaces reduce minimums, lower costs and facilitate cross‑border distribution, as demonstrated by Hamilton Lane’s tokenized secondary fund and Brazil’s AmFi platform.
4. Regional nuances matter. Latin American investors face regulatory caps and currency risks; Middle Eastern investors must navigate Sharia compliance and concentration risk; CEE investors need education on international fund structures and diversification.
5. Advisors play a pivotal role. By expanding their perspective through structured education, leveraging technology, advocating for regulatory harmonization and building trust, advisors can unlock transformative opportunities for clients and help democratize private markets.