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Franklin Square Study: Transparency Ranks High in Choosing Alts Providers

Franklin Square Capital Partners announced findings from a survey of 275 financial advisors and how they view alternative investments. When asked what attributes drive their choice of providers, independent broker-dealers gave equal weight to their top two drivers: “delivers strong, consistent investment performance” and “has a high level of integrity and transparency.”

“Performance is naturally a primary consideration when advisors evaluate alternative investment providers, but it is telling that they place just as much importance on transparency,” said Berta Aldrich, chief marketing officer at Franklin Square. “Increasingly, advisors demand clarity and are looking for thorough education before they make alts recommendations to investors.”

Other notable findings from the survey include the following:

  • Looking ahead, the top five alternative investments being considered for allocation include mutual funds (72 percent), real estate investment trusts (63 percent), exchange traded funds (62 percent), oil and gas programs (37 percent) and business development companies (36 percent).
  • 89 percent of advisors expect alternatives to have a low degree of correlation to the broader markets.
  • 53 percent indicated that they are open to recommending alternatives with limited liquidity.
  • 23 percent strongly agree that alternatives should outperform traditional investments, while 28 percent strongly disagree.

Franklin Square is a manager of alternative investment funds designed to “enhance investors’ portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors.” As of June 30, 2015, the firm managed approximately $17 billion in total assets, including $15.7 billion in business development company assets, making it the nation’s largest manager of BDCs.


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