Nomura International Wealth Management (Nomura IWM) is pushing for one of the industry’s most aggressive shifts into alternative assets, joining a regional race to lift client allocations out of the single digits.

“We expect client allocations to alternatives to reach 35%-40% over the next three to five years, with alternatives serving as true equity replacement strategies rather than portfolio diversifiers,” said Connie Sin, head of funds and alternatives international wealth management, Nomura. 

Nomura IWM’s expectation comes as exposure to alternative investments remains low for most: 44% of private wealth management firms’ clients hold less than 5%, while roughly 20% fall into each of the 6-10% and 11-15% allocation tiers, per the latest PWMA report.

Just a third of the respondents expect allocations to hit the 11%–15% range within five years, while a mere 9% see exposure climbing above 26%, according to the report.

“This shift acknowledges that traditional diversification methods may provide insufficient protection during periods of market stress when asset correlations rapidly converge,” Sin added. 

Market evolution is one of the key drivers leading to the ambitious alts penetration target, alongside increasing client sophistication. That evolution is translating into rapid growth on the ground. 

Over the past three years, Nomura IWM saw its alternatives penetration surge more than double from low single digits to high double digits of overall managed investment fund AUM.  

Currently, aligned with Nomura IWM CIO strategic asset allocation (SAA), the Japanese lender also recommends a 25-30% allocation to alternatives, representing a fundamental departure from traditional 60/40 portfolio construction, per Sin. 

Portfolio intention vs implementation

Despite the ambitious target, there remains a significant gap between intention and implementation in increasing alts allocations. 

Sin is no stranger to what she described as “a fascinating dichotomy” that the team observes daily. She found the gap mirrors familiar patterns in other less familiar asset classes, particularly the persistent underweight positions in Japanese and emerging market equities despite their compelling long-term fundamentals.  

“Investors understand the theoretical benefits of alternatives… yet struggle with practical execution: manager selection, liquidity management, and portfolio integration. The common thread? Implementation complexity and knowledge gaps create friction between strategic intent and portfolio reality,” Sin said.   

Lack of understanding and transparency, liquidity misconceptions, and manager access and selection are the main barriers that Sin highlighted in making an alts penetration breakthrough. 

Evergreen and semi-liquid funds offer easier access to private markets, but the evolution often leads investors to underestimate complexity, as the reality of long-term investment horizons frequently clashes with the expectation of easier exits.

“The challenge intensifies during market stress periods. Some managers, particularly those lacking sufficient scale or robust liquidity management frameworks, struggle to balance redemption requests with underlying asset liquidity.

“When redemption gates are implemented – a necessary risk management tool – it often generates negative headlines that amplify investor anxiety and can trigger redemption cascades driven more by fear than fundamental concerns,” said Sin, adding that this dynamic creates a vicious cycle and could potentially undermine investor confidence.   

“The fundamental question isn’t whether alternative allocations will increase – it’s which clients will capture this opportunity first. The key is education,” Sin emphasised. 

Rethinking exclusivity 

Nomura IWM rejects what it terms “manufactured scarcity,” where exclusivity is used as a marketing tactic. Instead, the firm redefines exclusivity not as mere product access, but as the specialised expertise and strategic positioning required to secure superior, high-alpha outcomes for clients.

“It’s about having the expertise, relationships, and positioning to identify and secure the opportunities that will drive superior long-term outcomes for our clients. In a market where true alpha is increasingly scarce, authentic exclusivity becomes the ultimate differentiator,” Sin said.

“Our optimal size creates what we call the Goldilocks effect — we’re substantial enough to command respect from premier asset managers, yet nimble enough to secure allocations that larger institutions simply cannot access due to capacity constraints,” she added. 

As such, Nomura IWM rejects fleeting exclusives in favour of first-mover intelligence — a strategy built on deep, enduring alliances with specialised managers. By prioritising capacity-constrained specialists over mass-market distributors, the firm protects alpha from being diluted by excessive inflows. 

This approach transforms partnerships into compounding knowledge advantages, ensuring consistent access to superior opportunities and preferential terms through institutional expertise rather than temporary marketing restrictions. “Our partnership strategy recognises a critical market reality: the most compelling managers are highly selective about their distribution partners,” said Sin. 

Strategies in demand

Nomura IWM’s 2026 strategy focuses on four key alternative pillars, beginning with private equity, where preferences are evolving toward flexible growth equity in technology and healthcare to secure predictable innovation exposure. 

Simultaneously, the firm sees a rise in multi-strategy hedge funds, which leverage quantitative overlays and market-agnostic tactics to provide diversified alpha and lower-correlated results across different environments.

The firm also prioritises real assets and specialised real estate to provide clients with inflation protection and steady income. By focusing on infrastructure debt and structural growth themes like data centres and logistics, these strategies utilise hard-asset collateral and long-term demographic trends to enhance portfolio resiliency and sustainable cash flow generation.