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Photo: Fabrice Coffrini/AFP/Getty Images

As deals from venture capital, private equity and real estate firms produce more headlines about billion-dollar deals and millionaire backers, investors are clamoring for ways to sink their teeth into so-called alternative investments. Big banks and asset managers are finding ways to help them do it.

Driving the news: Indexing giant Vanguard Group has reportedly started discussions with private-equity firms about a push further into alternative investments.

  • The Wall Street Journal reported the news Sunday, less than a week after reports that Goldman Sachs is putting together a 4-unit division with around $140 billion in assets to invest in private companies and other alternative assets like real estate.

What we're hearing: There's been growing interest in the space from clients at multinational investment firm UBS. Suni Harford, UBS Asset Management head of investments, says "not a day goes by" that she doesn't get questions from clients about alternatives.

What's happening: Many believe private equity has significantly outperformed stocks over the past decade, even though the data is more ambiguous. But as more companies like Uber, Slack and Pinterest come to market already worth billions, demand is growing to get in on the early stages of investment.

  • The same is happening with real estate and various loan markets, which generally offer higher yields than most bonds.

Harford says demand for alternatives also is rooted in increased comfort with private markets despite the lack of regulations and safeguards afforded by public markets.

  • "It's filling the gap that was left in the credit crisis, because banks just aren't lending," she told Axios at a recent event in the bank's Manhattan headquarters.
  • "There is this whole second level of investor capital coming in to fill the gap on private credit investing: loans literally to individuals or small companies and whatnot. So [there's] a tremendous amount of interest from people in a variety of ways that private credit can be offered. There's not a client that doesn't want to play there."

Further, says UBS head of real estate and private markets Joseph Azelby, alternatives are attracting flows from investors of all stripes — from high net worth individuals to institutional money managers who are pulling capital out of bonds, because of their historically low yields, and out of stocks, because of their successful run.

  • "That's driving interest in private credit, infrastructure, real estate and it's going to drive 10 other things that folks in our business are going to think of to tap into that need for diversification."

Yes, but: "The flow into alternatives is not actually showing up in hedge funds," said Barry Gill, head of active equities at UBS, who previously worked on the firm's multi-strategy hedge fund.

  • "Hedge funds have been net givers of flow, or least they have not participated anywhere close to the same extent" as other alternative investment vehicles.

Go deeper: The hedge fund moment is over

Go deeper

Starbucks drops worker vaccine or test requirement after SCOTUS ruling

Photo: Jakub Porzycki/NurPhoto via Getty Images

Starbucks has dropped plans to require that U.S. workers get the COVID vaccine or submit to weekly testing, the company announced Tuesday in a memo to employees.

Why it matters: The company's decision comes in response to the Supreme Court's ruling last week to block the Biden administration's COVID-19 vaccine-or-test requirement for large employers.

2 hours ago - World

Netanyahu plea talks enter crunch time

Netanyahu (right) meets with his lawyer ahead of a court hearing last February. Photo: Reuven Casto/Pool/AFP via Getty

Benjamin Netanyahu, Israel's opposition leader and former prime minister, is negotiating a possible plea deal over the corruption charges against him, but Attorney General Avichai Mandelblit appears to be toughening his terms.

Why it matters: Mandelblit leaves office on Jan. 31. Negotiations could continue beyond that point, but the next attorney general may be less interested in quickly reaching a deal.

3 hours ago - Health

Omicron hits American hospitals disproportionately hard

Expand chart
Data: Our World in Data; Chart: Will Chase/Axios

America is seeing more COVID hospitalizations than other wealthy countries during the Omicron surge, according to Our World in Data.

Why it matters: Vaccines keep the vast majority of COVID cases out of the hospital, but vaccination rates are also lower in the U.S. than these other countries.