Unlocking the Royalty Asset Class: Lincoln Financial and Partners Group's Strategic Move in the U.S. Alternative Investment Landscape

The U.S. alternative investment landscape in 2025 is undergoing a seismic shift, driven by institutional demand for diversification, yield generation, and exposure to non-correlated assets. As traditional asset classes face headwinds from inflation and low interest rates, private markets—particularly royalty investments—are emerging as a compelling solution. Lincoln Financial's collaboration with Partners Group to launch the Lincoln Partners Group Royalty Fund represents a strategic entry point for institutional investors seeking to capitalize on this evolving ecosystem.

The Rise of Royalty Investments in a Fragmented Market

Royalty assets, once niche, are now gaining traction as a high-potential, income-generating alternative. The global music royalty market alone is projected to grow at a compound annual growth rate (CAGR) of 8.54%, reaching $50.2 billion by 2030Music Landscape Market Analysis | Industry Growth^[1]. This growth is fueled by streaming platforms like Spotify, which drove a near-fivefold increase in streaming hours between 2015 and 20212025 Music Industry Report: What Every Investor Should Know^[2]. For institutional investors, music royalties offer average annualized returns exceeding 12%, far outpacing the S&P 500's 1.8% dividend yield2025 Music Industry Report: What Every Investor Should Know^[2].

Beyond entertainment, the biopharma sector is another royalty hotspot. In H1 2025 alone, biopharma companies executed $3.4 billion in royalty and revenue-interest deals, leveraging non-dilutive financing to monetize future drug revenuesRoyalty Financing Rescues Biopharma: A H1 2025 Global Analysis^[3]. Royalty Pharma's Q2 2025 results underscore this trend, with Portfolio Receipts rising 20% year-over-year to $727 millionRoyalty Financing Rescues Biopharma: A H1 2025 Global Analysis^[3]. These developments highlight the versatility of royalty assets across sectors, from recurring revenue streams in music to milestone-based payments in healthcare.

Lincoln Partners Group Royalty Fund: A Structured Approach to Diversification

The Lincoln Partners Group Royalty Fund, a Delaware statutory trust, is uniquely positioned to harness these trends. The fund's cross-sector strategy spans well-established markets like pharmaceuticals and entertainment, as well as emerging areas such as energy transition and sportsLincoln Partners Group Royalty Fund - SEC.gov^[4]. By investing in existing royalties, creating new ones, and lending against royalties, the fund offers a multi-pronged approach to capturing value.

Under normal market conditions, the fund allocates at least 80% of its net assets to royalty investments, with flexibility to allocate up to 70% to direct royalties and 30% to credit instrumentsLincoln Partners Group Royalty Fund - SEC.gov^[4]. This structure allows it to balance income generation with capital preservation, a critical consideration in a high-inflation environment. Partners Group's relative value approach—combining deep sector expertise with Lincoln Financial's distribution network—further enhances the fund's appealPartners Group Expands with New Royalty Fund and Investments^[5].

Strategic Positioning in the $65 Trillion Private Markets Boom

The fund's launch aligns with broader industry trends. Institutional allocations to alternatives have surged to 38% of portfolios in 2025, driven by the need for risk-adjusted returnsThe State of Alternative Investments in Wealth Management 2025^[6]. Private markets, projected to reach $65 trillion in AUM by 20322025 Private Markets Outlook - Institutional^[7], are a key beneficiary of this shift. The Lincoln Partners Group Royalty Fund's evergreen structure—a first for U.S. individual investors—addresses liquidity challenges in private markets, enabling continuous capital deployment and reinvestmentLincoln Partners Group Royalty Fund - SEC.gov^[4].

Moreover, the fund taps into the growing institutional interest in niche alternatives. For instance, infrastructure investments are expected to hit $1.73 trillion in 2025, while private debt is expanding into asset-backed financeThe State of Alternative Investments in Wealth Management 2025^[6]. By diversifying across sectors and leveraging Partners Group's global reach, the fund mitigates sector-specific risks and enhances its resilience to macroeconomic volatility.

Conclusion: A Strategic Entry Point for Institutional Investors

As institutional investors navigate a fragmented and volatile market, the Lincoln Partners Group Royalty Fund offers a compelling solution. Its cross-sector diversification, innovative structure, and alignment with industry trends position it as a strategic entry point for those seeking to access the royalty asset class. With private markets poised for sustained growth and royalty assets delivering robust returns, this fund exemplifies how collaboration between industry leaders can unlock new opportunities in the alternative investment landscape.