AAUM targets the business models that eat traditional asset management's lunch — private equity firms, hedge fund managers, and alternative investment platforms that command higher fees and stickier assets than mutual fund companies.
How It Works
The fund owns publicly-traded alternative asset managers like Blackstone, KKR, and Apollo, weighted by market cap with individual position caps. These firms manage everything from buyout funds to real estate, earning performance fees on top of management fees. The portfolio rebalances quarterly to capture new IPOs in this rapidly consolidating industry.
Key Features
- Pure-play exposure to firms managing $10+ trillion in alternatives vs mixed financial ETFs
- Benefits from both AUM growth and performance fee upside during bull markets
- Captures the shift from public to private markets without lockup periods
Risks
- Performance fees can evaporate in downturns, causing 40-60% earnings swings
- Regulatory risk as carried interest tax treatment faces constant political pressure
- Many holdings trade at 20-30x earnings, leaving little room for disappointment
Who Should Own This
Built for investors who want to own the toll collectors of the alternative investment boom without being limited partners themselves. Works as a financial sector overweight for those betting that pension funds and endowments will keep plowing money into private markets regardless of public market conditions.