How I Invest with David Weisburd
E140: Hamilton Lane Co-CEO on the $950 Billion AUA Business
21 Feb 2025
In this episode of How I Invest, I sit down with Erik Hirsch, Co-CEO of Hamilton Lane, a global leader in private market investing. Erik discusses the evolving landscape of private markets and the integration of digital tools like tokenization in investments. He dives into how private markets are becoming more accessible to retail investors and the future of asset management, with a focus on education and technology. From the role of RIAs and wirehouses to the impact of digital wallets and tokens, Erik provides deep insights into what’s next for investors at every level. If you're curious about the future of investment opportunities and how they will change by 2030, this episode is a must-listen.
Full Episode
It makes sense why retail investors would want to diversify and own more in private assets. What's a little bit harder to understand is why somebody like a Hamilton Lane, you have today $950 billion in AUM and AUA assets under advisement. Why do you care about the retail market? Why even spend time on the retail market?
Those who have pensions today have been significantly benefiting from private market allocation because as we just talked about, those pensions have 5, 10, 15, 20, 25, up to sort of 40% in the private markets in some cases. And the fact that sort of the average American, the average saver, hasn't had any exposure to that, I think is just an inequality.
And we're big believers that we have a real retirement crisis here in this country that needs solving. And one of the ways to solve that is to give people access to more tools. The second part is we're a business. And if you just look at the pure opportunity set, the amount of capital in the hands of individual savers globally is tens of trillions of dollars. So it's a massive market.
And again, if we look at sort of average exposure of that investor base, average mass affluent individual has an exposure of 0%.
Last time we chatted, you mentioned that the 60-40 portfolio is a fallacy. Why did you say that?
The markets have evolved enormously since that sort of mindset was sort of put into sort of the common thinking. One, fixed income today in a purely public sense is just not what it was decades ago when you were often seeing double-digit interest rates. And the 60-40 portfolio completely omits one of the best performing asset classes, which has been the private markets.
And so if you look today at where investors are pivoting, they're frankly mimicking what's been happening in the institutional world. You couldn't find me an institutional investor today that's sophisticated, that has a 60-40 portfolio.
Most of them today in the institutional world have a public equity portfolio that is probably 50% at max and then has huge exposures to things like private markets, other alternatives, including hedge funds.
What is the driving force behind why more retail investors are starting to invest like institutional investors?
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