PGIM's Platform Strategy for Private Markets

In Brief:

The private markets industry faces a critical inflection point as wealth management platforms grapple with structural complexity and implementation barriers that have kept alternative investment penetration stagnant at just 3-4% of client portfolios despite a $40+ trillion addressable market. Dominick Carlino, PGIM's Global Head of Alternative Investments, articulates how the convergence of insurance, asset management, and wealth distribution creates competitive advantages in an increasingly crowded marketplace where over 300 evergreen funds compete for shelf space and firms race to build or acquire private markets capabilities.

Big Picture Drivers:

• Market maturation: Wealth channel private markets adoption mirrors the institutional evolution from 20 years ago, requiring extensive stakeholder education and product development to overcome structural implementation barriers

• Consolidation pressure: Asset managers face a decisive moment where scale, breadth of capabilities, and distribution reach will separate disproportionate winners from marginal players in the wealth channel

• Insurance convergence: The intersection of insurance general accounts, asset-liability matching expertise, and permanent capital pools creates strategic partnership opportunities that extend beyond traditional asset management relationships

• Structural innovation: Evergreen fund growth dramatically outpaces traditional closed-end structures, with 58 funds in registration and market expectations for doubling within five years as investors demand lower minimums and simplified implementation

Key Themes:

• Vertical integration advantage: PGIM's 150-year insurance heritage combined with $330 billion in private markets and over $1 trillion in public markets creates self-reinforcing asset-liability matching capabilities that differentiate the platform from pure-play asset managers or recently assembled multi-strategy firms

• Distribution as competitive moat: Nearly 250 global distribution professionals with structured training protocols, flexible engagement models, and clear escalation rules provide scalability that wealth platforms require when partnering with alternative asset managers

• Education as enabler: Successful private markets adoption requires multi-layered education spanning distribution teams, financial advisors, and end clients, delivered through modular content including podcasts, white papers, digital portals, in-person training, and third-party accreditation programs

• Organizational trust premium: Market volatility and liquidity challenges elevate the importance of sponsor reputation and operational track record, particularly for open-end structures with inherent asset-liability mismatches where firms must demonstrate cycle-tested risk management capabilities

Key Insights:

• Scalability bottleneck: Wealth platforms face manufacturing capacity constraints in originating managers, negotiating agreements, and providing ongoing support, making manager scalability—defined as breadth of capabilities, steady product pipeline, and distribution support—a critical selection criterion that eliminates many single-strategy or recently assembled platforms.

• Structural evolution: The market initially focused heavily on hedge fund strategies before shifting toward private markets, and now views public and private exposures as a fluid continuum for liquidity and exposure management rather than discrete allocation buckets, requiring sophisticated understanding of embedded betas across economic regimes.

• Simplification imperative: Despite 300+ evergreen funds in the U.S. market, penetration remains stuck at 3-4% because the denominator grows faster than the numerator, indicating that turnkey multi-asset solutions and guided implementation through model portfolios or managed account constructs are essential to accelerate adoption beyond current levels.

• Credit discipline differentiation: PGIM's conservative underwriting approach prioritizes active credit risk management through covenant protection and disciplined entry leverage over maximizing scale or growth, a philosophical stance that becomes apparent during market stress when firms providing passive credit beta face meaningfully different outcomes.

• Retirement potential: Private markets entered defined contribution plans as early as 2006 with daily-valued real estate products, but meaningful adoption requires alignment across plan sponsors, consultants, and advisors amid regulatory scrutiny, suggesting growth will follow the slow institutional adoption pattern from two decades ago rather than rapid acceleration.

• Partnership dynamics: Asset managers increasingly seek partnerships with PGIM not only for distribution access to wealth channels but also for insurance general account capital deployment, private placement life insurance and annuity vehicles, and pension asset-liability risk management capabilities that extend well beyond traditional fund distribution relationships.

Memorable Quotes:

• "When you think about a firm like Prudential PGIM and their ability to meet any number of client goals, it's pretty profound. It's pretty impactful." - Dominick Carlino, explaining the strategic advantage of integrated insurance and asset management platforms

• "We've been an insurance company for 150 years. So we've been sourcing liabilities for a long time and matching assets against those. This is permanent capital where premiums are paid on an ongoing basis. There's this virtuous cycle of sourcing liabilities and matching assets." - Dominick Carlino, describing PGIM's structural competitive advantage in private markets

• "We're fundamentally a conservative company and we really seek to actively manage credit risk. We're not looking to provide you with just private credit beta. We make sure we have the right covenants in place, sufficiently low entry leverage that meets our underwriting standards." - Dominick Carlino, articulating PGIM's credit philosophy and willingness to sacrifice scale for discipline

• "I think more ease of use as relates to implementation, more simplified turnkey exposure to alts will be increasingly important whether it's within a single fund or a model portfolio. The denominator is growing faster than the numerator." - Dominick Carlino, identifying why wealth channel penetration remains stagnant despite massive market opportunity

• "In 2010 some of the most prominent alt players today who have the largest market shares were not really a known brand to the wealth channel. I think people look at us and I think we emote trust. If things get challenging, we'll be there." - Dominick Carlino, explaining how organizational reputation and operational longevity create competitive advantages during market stress

The Wrap:

The private markets industry stands at a crossroads where execution capabilities and organizational infrastructure will matter more than investment performance alone. Firms competing for wealth channel adoption must demonstrate scalability across product development, distribution support, and operational resilience while navigating the complex interplay between asset management, insurance, and wealth distribution. PGIM's approach suggests that integrated platforms with century-long track records, permanent capital bases, and comprehensive distribution networks hold structural advantages over pure-play managers or recently assembled capabilities. As the market moves beyond core strategies toward specialized exposures and multi-asset solutions, the ability to combine public and private markets expertise with conservative risk management and trusted sponsor status will increasingly separate disproportionate winners from marginal players in this rapidly evolving landscape.