WAM’s private markets strategy for long-term growth and dividends

This interview was recorded on the 10th of March 2026

Wilson Asset Management is a household name for many investors and undoubtedly for Livewire readers. The firm was established in 1997 by Geoff Wilson AO and raised $20 million for its first LIC, WAM Capital in 1999.

Today Wilson Asset Management manages in excess of $6 billion in assets on behalf of more than 130,000 investors. Many of those investors have been drawn to WAM’s LICs by the prospect of capital growth and fully franked dividends, a defining feature of the listed investment company structure.

While WAM has traditionally been an equity investment house with deep roots in Australian small caps, in recent years the firm has branched out into other asset classes to give its investor base greater diversification. Institutional investors have been allocating to alternative assets such as private equity, infrastructure and private credit for decades. These assets are often difficult for retail investors to access directly, which is where listed vehicles like WAM Alternative Assets (ASX: WMA) come in.

In 2020, Wilson Asset Management took over management of what is now WAM Alternative Assets, a listed vehicle that previously operated as the Blue Sky Alternatives Access Fund.

It's a case of the old meeting the new. The LIC structure is one of the oldest ways investors have been able to access a portfolio of assets in a single listed vehicle, with the first LIC listed more than 100 years ago. Alternative assets, meanwhile, have become one of the fastest growing areas of institutional portfolios.

Nick Kelly is the portfolio manager of WAM Alternative Assets and joined the firm in 2025 following a career at Willis Towers Watson.

“This is all I’ve done for the better part of 15 years. My background is in private markets and manager selection across the alternatives universe,” Kelly says.

Nick Kelly, Portfolio Manager, WAM Alternative Assets (ASX:WMA)

Where is WAM Alternative Assets investing today?

The opportunity set for WAM Alternative Assets is broad. The portfolio can invest across private equity, real estate, infrastructure, agriculture, water rights and private debt, effectively anything that provides diversification away from listed equities.

For most retail investors, many of these opportunities are out of reach. Instead, Kelly and his team focus on identifying specialist managers with deep expertise in their respective sectors.

“Our skill set is picking and selecting investment managers. We spend more than 250 hours with each partner before investing with them,” Kelly says.

Once those relationships are established, the fund can invest in a manager’s primary fund or co-invest alongside them in specific deals.

Private equity for long term capital growth

Private equity is currently the largest allocation in the portfolio and reflects the depth of opportunities available in private markets.

Kelly says the fund invests across three main strategies:

• Buyouts, typically larger deals where a business is acquired and operational improvements are made before selling it later

• Growth equity, where capital is provided to expanding businesses, often when founders are transitioning ownership

• Turnaround strategies, where managers work to improve underperforming companies

Part of the appeal of private markets is the sheer size of the opportunity set. There are fewer than 2,000 companies listed on the ASX, but more than 160,000 private businesses in Australia employing over 20 people.

Many of the businesses the fund gains exposure to are deliberately simple, established and resilient.

Examples include a manufacturer of industrial screws used in construction and the largest auditor of self-managed super funds in Australia.

They may not be glamorous businesses, but they often have characteristics investors value: recurring revenue, strong market positions and demand that is unlikely to disappear with the next technological shift.

“They’re often traditional businesses that people don’t get exposure to because they’re privately owned,” Kelly says.

Private equity also requires a long-term mindset. Capital may be committed for close to a decade while managers acquire, improve and eventually exit businesses. Water rights, a scarce asset with diversification benefits

One of the more unusual allocations in the portfolio is water entitlements.

Australia has a well-established water market where investors can own water rights across major river systems such as the Murray-Darling Basin. Those entitlements receive an annual allocation of water based on rainfall and river conditions.

Managers can then generate returns in two ways:

• Leasing water allocations to farmers and irrigators

• Capital appreciation as water prices rise

“The returns come both from the stock of water that we hold and also the leases on those entitlements,” Kelly says.

There are also supply dynamics supporting the market. Governments have been buying back water entitlements for environmental purposes, reducing the number available to investors.

At the same time, dry conditions across agricultural regions have pushed spot water prices higher.

For investors, the biggest attraction may be diversification.

“It’s a wonderful diversifier. What’s happening overseas or in geopolitics doesn’t influence whether it rains or not,” Kelly says.

Private credit, tread carefully

Private credit has attracted significant investor interest in recent years, but it remains a relatively small allocation in the WMA portfolio at around 10%.

Kelly says the asset class can play an important role in a diversified portfolio, but investors should be selective.

One of the key qualities he looks for in a private credit manager is experience dealing with distressed situations.

“There’s one thing to go and write a loan, there’s another thing to work it out when it goes pear shaped,” he says.

Transparency is another important factor. If a portfolio of loans never reports losses or write-downs, it may warrant closer scrutiny.

“If everything’s marked at par and nothing’s been written down, that’s a red flag. If it’s too good to be true, it probably is.” Kelly says.

Explaining the returns 'J-curve'

Private markets operate on a very different timeline to listed equities. Kelly often uses the concept of the 'J-curve' to explain how returns are generated in private equity. In the early years of an investment, capital is deployed and improvements are made to a business, which can temporarily drag on returns.

“It’s like renovating a home. You buy the house, invest money to improve it, and then the value increases later on,” he says.

That process can take several years before the benefits start to flow through, typically two to four years, depending on the strategy.

For investors, this means patience is essential.

The LIC structure supports that long-term approach. Because it is a closed-end pool of capital, the manager does not need to sell assets to meet redemptions and can invest with a longer horizon.

At the same time, investors retain daily liquidity through the ASX. LICs can trade at premiums or discounts to their underlying asset value, something investors should keep in mind.

For Kelly, the structure helps bridge the gap between the illiquid nature of private markets and the needs of retail investors.

“It’s a closed-end pot of capital that allows us to manage illiquid assets, while investors still have daily liquidity through the market,” he says.

For investors willing to take a longer-term view, it offers a way to access parts of the market that have traditionally been the domain of institutions.

Learn more about WAM Alternative Assets

WAM Alternative Assets (ASX: WMA) is the only listed investment company on the ASX that offers investors access to a diversified portfolio of alternative assets, typically accessible only by institutional investors. For more information, please visit the WAM website.