Family offices hold 43% of their capital in alternatives and institutions run 40% to 50%, on the figures Tony Davidow cited. The wealth channel he advises holds about 5% to 6%.
The standard advice is a 10% alternatives sleeve. Davidow's point is that 10% is a starting line rather than an answer, and that straight portfolio modeling would put the number three to six times higher.
"If you're not willing to allocate or unable to allocate capital for five to ten years, you shouldn't be allocating at all, right?"
Davidow was hired at Franklin Templeton to build the firm's alternatives education program from nothing, writes its white papers and hosts its Alternative Allocations podcast, and he worked with Morgan Stanley's banking clients through the dot-com era.
The full segment is covered here so you can skip it.
Here are the 6 insights that matter.
👤 Guest: Tony Davidow, Senior Private Market Strategist at the Franklin Templeton Institute, who built the firm's alternatives education program and hosts its Alternative Allocations podcast
🎙️ Hosts: Carol Massar and Tim Stenovec, who anchor Bloomberg Businessweek Daily, live from the Future Proof conference in Huntington Beach, California
🧩 Other segments: Jan van Eck of VanEck, Jaime Magyera of BlackRock, and Scott Dennis of TCW
📰 Published: 15 September 2026 on the Bloomberg Businessweek Daily podcast
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ length not available
Key Takeaways
Family offices are at 43% in alternatives and the wealth channel is at 5% to 6%
Straight modeling would put an individual investor at 20% to 30%, on his account
A company that stays private for 24 years arrives on the public market as a different animal
In the dot-com era a company was private for three or four years and listed because that was the only way to cash out
Two trillion-dollar listings would reset the price of everything else in private markets, which he treats as a good thing
He sees no systemic risk in private credit, and points at defaults rather than at sentiment
The redemption fights are the industry's own fault for not explaining the liquidity terms at the front door
The usual fund gate lets investors take out 5% a quarter, and it exists to protect the people who stay
Real estate has repriced further than private equity has, in his reading, often below replacement cost
1. Public Against Private
Massar opened the hour with the size comparison, and Stenovec immediately qualified it.
The hosts' own framing: the US public equity market is worth around $75 trillion, against global private markets usually quoted at $16 trillion and sometimes at nearly $20 trillion.
Stenovec's caveat is the one that matters for the comparison: the two sides are not marked to market at the same rate. Massar agreed that the gap is large whichever way it is measured.
Davidow said he was hired at Franklin Templeton to build the alternatives education function because the asset class was new to the wealth channel, and the questions coming at him were basic ones — how do these strategies work, are they illiquid. His answer to the second is yes.
"I was originally hired to build all of our alternative education as we recognize this is new to the space." He now writes white papers and hosts the firm's podcast, Alternative Allocations, which Massar noted has won an award.
2. The SpaceX Convergence
Massar asked what the SpaceX listing says about a market where private and public keep crossing over. Davidow said it is the example he uses most with advisors.
His comparison is with the companies he worked with at Morgan Stanley during the dot-com era. Those businesses were private for three or four years and went public because listing was the only way to monetize the opportunity.
"SpaceX was a 24-year-old company." Stenovec pointed out that makes it older than Facebook; Massar called it a young adult rather than a teenager.
The difference is the funding route. SpaceX could raise what it needed privately, which gave Elon Musk time to run a long-term plan, and by the time it listed at a $2 trillion valuation it was a far more mature business than a dot-com-era listing.
"So I'd argue there's this convergence of public and private. We need to think of them differently."
He was careful not to sell the category on its best example: "These are new companies. Not all of them are going to be great." Not every one goes on the journey of a SpaceX, and he named Anthropic and OpenAI as the other names people have in mind.
3. Do Big IPOs Crowd Out
Stenovec put the crowding-out question to him: with Anthropic and OpenAI carrying private valuations above a trillion dollars, does that starve everyone else of capital?
Davidow would not take the question at face value. "I think there's been a lot of debate in the market about do you suck the oxygen out of the room with these large IPOs."
His step back is to 2021 peak valuations and the exit drought that followed. Initial public offerings and merger activity have run at "Roughly half the size since 21."
That produced what he called an illiquidity mismatch: institutions needed liquidity out of private equity and the exits were not there. His conclusion is that there is a backlog of companies that still have to reach the public market.
The reason he treats two giant listings as a positive is price discovery. A listing forces a reset of valuations across the whole market and forces investors to separate the companies that work from the ones that do not.
He expects the calendar to pick up on both sides, in listings and in mergers, and said many of the young companies needing public capital will succeed and some will not.
4. Markdowns Are Coming
Massar pressed on the other half of that: private equity and private credit houses have been waiting for valuations they like, and at some point have to move.
"I think you're going to see definitely some markdowns." He called it the reality of resetting against 2021 peaks, and framed the question a company has to answer as what it is worth today rather than what it was worth then.
The repricing is further along in property than in private equity, on his reading. Real estate has come down a good deal since 2021 and has taken the negative headlines with it.
Where that leaves valuations is his most concrete claim on the sector: reset real estate marks now often sit below replacement cost.
5. No Systemic Risk Yet
Massar raised the crisis question directly, citing the show's earlier interview with Bill Cohan, the former investment banker whose new book is about Apollo, and the opacity of private markets generally. Davidow split the answer into three.
His first move was to separate the two asset classes. Private equity and private credit respond to different fundamentals and sit at different stages, so a single verdict on "private markets" is the wrong instrument.
"Private credit certainly has got the headlines." He traced the alarm to the comment about cockroaches and the question of whether the sector carries systemic risk.
His answer is no, and the evidence he gives is the default rate: "And we would argue we don't see any signs of systemic risk. Defaults have remained very low." He said it is something the firm watches carefully.
The second issue he named is software exposure. Some private-credit funds — not all of them — carry substantial exposure to software companies, and write-downs have started. His dot-com parallel is that the sector should not be treated as one thing, and that companies will emerge into different vertical businesses.
The third is redemptions, and here he blamed the industry rather than the market. "We need to do a better job making it clear to people on the way in the door, these are illiquid investments. That's what makes them special."
The fund gate is a feature, in his account, not a fault: "There's nothing wrong with this structure, but they all have or typically have a 5% liquidity provision to protect the long-term investors so you can allocate capital for the long run."
His verdict on the resulting headlines: "So that's something I would argue is a little self-inflicted."
6. The 10% Starting Point
Stenovec asked what the mix inside a 10% alternatives sleeve should actually be — private credit, private equity, venture, real estate.
Davidow started at the sleeve rather than the mix: "But again, I like the starting point of a 10% allocation." What sits inside it depends on age and objective.
The gap he is arguing against is between practice and theory. "The wealth channel is roughly a 5% to 6% allocation."
His modeled number is several times that: "Just in a naive sort of way, if you just did pure modeling, it would suggest a 20% to 30% allocation would be appropriate" — on the strength of the risk and return characteristics. Stenovec said that was much higher than he expected.
The benchmark he reached for is the people with no distribution constraints: "Well, actually, the UBS Global Family Office report cites data that family offices are 43% allocation, and we know institutions are 40 to 50." He described the distance between 5% and those numbers as a runway.
The gate he puts on all of it is time, not risk appetite: "If you're not willing to allocate or unable to allocate capital for five to ten years, you shouldn't be allocating at all, right?"
Within the sleeve his split is by objective: a younger, growth-oriented investor holds more private equity, and an investor who needs income holds more private credit.
Bonus Insights
Massar said the crossover between public and private is now constant enough that SpaceX reads as the example of a company that stayed private "for so long" and then listed with a bang, with more expected behind it.
Davidow's framing of his own job is that it is an education problem rather than a distribution one — helping advisors and investors make better informed decisions is how he described the mandate.
Stenovec noted that an alternatives allocation is, for most portfolios, a small part of the whole, which is what set up the question about the mix inside it.
Davidow's bottom line is that individual investors are running roughly a tenth of the alternatives exposure that family offices and institutions run, and that the obstacles are education and time horizon rather than the structure of the funds themselves.
Products, Companies & Tools Mentioned
Franklin Templeton (His employer; he built its alternatives education program and writes its white papers)
SpaceX (The 24-year-old private company whose listing he uses as the example of public-private convergence)
Anthropic and OpenAI (The private companies whose trillion-dollar valuations prompted the crowding-out question)
Morgan Stanley (Where he worked with banking clients through the dot-com era)
Apollo Global Management (The subject of the Bill Cohan book Massar raised when she asked about crisis risk)
Books & Resources Mentioned
Alternative Allocations (Davidow's own podcast at Franklin Templeton, which Massar noted has won an award)
UBS Global Family Office Report (His source for the 43% family-office allocation to alternatives)
Money to Burn – William D. Cohan (The book on Leon Black and Apollo by the former investment banker the show had interviewed earlier)
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