James Costabile, Managing Director and Head of Alternative Investment Distribution for iCapital, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the growth of the alternative investment landscape and how iCapital facilitates access for financial advisors.
iCapital has reached $210 billion in assets and is approaching 1,700 employees. Costabile’s role is to build out the US marketplace platform that RIAs use to gain access to alternative investments
iCapital continues to make notable acquisitions that provide value to financial advisors. The most recent acquisition is Mirador, a data aggregation and financial reporting company that enables advisors to pull statements from multiple sources, providing a comprehensive financial view that includes positions that are difficult to value. The technology seeks to reduce manual processes in creating client statements. In addition to using technology to scrape the statements, there are people in the loop to improve the accuracy of the information.
Over the last two years, iCapital has increased the number of available investment products from 65 to nearly 250, covering private equity, private credit, real assets, and hedge funds. Over 75% of the products have completed iCapital’s investment due diligence process, while all of the products have completed the business due diligence process.
iCapital’s asset allocation tool, Architect, utilizes actual manager returns and 13 factors to create a backcast track record from before the inception of each fund. Asset allocation tools at other firms typically use benchmark data, modeling the median return of each alternative investment strategy. Rather than exclusively benchmark data, Architect uses data on the dispersion of manager returns around benchmarks to create portfolios that consider the potential returns of each specific fund.
The Alternatives Decoded educational tool provides advisors a broad compendium of charts covering structured investments and each alternative investment category. The research and education team, led by Joe Burns and Kunal Shah, consistently publishes research, while the Chief Investment Strategist, Anastasia Amoroso, writes regular blog posts.
Costabile notes that model portfolios have changed the game for iCapital. The firm offers three model portfolios, focused on income, growth, and a balanced portfolio that seeks to optimize the Sharpe ratio. Each model holds four to five funds, with the iCapital technology offering the package with a single subdocument.
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