The global alternatives industry is poised to hit US$29.2 trillion in size by 2029, and is on track to exceed US$30 trillion by 2030, according to new data from Preqin.
With a recorded US$16.8 trillion in assets under management (AUM) by the end of last year, this difference would signify an annualised growth rate of 9.7 per cent between now and 2029.
Notably, this would mark a slowdown from the 10.5 per cent annualised growth rate seen between 2017–23, due to softer expectations for private equity and venture capital markets.
“Global alternatives markets continue to evolve rapidly, especially as individual investors’ access opens up, as the private wealth channel’s growth continues to gather pace,” said Cameron Joyce, Preqin global head of research insights.
“Investors are navigating evolving geopolitical risks as we move towards a multipolar world order – which presents a new set of investment opportunities and risks.”
Private equity is poised to remain the largest asset class in private markets, on track to more than double in AUM from 2023-end to 2029, from US$5.8 trillion to US$12 trillion.
What’s more, Preqin analysts believe the asset class could represent approximately 6 per cent of the combined public and private equity markets by the end of 2024.
This percentage is expected to increase over time owing to a combination of factors, including private companies staying private for longer, take-privates, lacklustre IPO markets, and an overall decline in the number of listed companies.
However, Preqin noted that performance over the forecast period is expected to be softer than it has been, with global private equity projected to have a lower internal rate of return compared with 2017–23, falling to 13.4 per cent from 15.5 per cent.
Meanwhile, private debt performance is forecast to improve, with the overall private debt AUM forecast to rise from US$1.5 trillion at 2023-end to US$2.6 trillion by 2029.
Other potential winners of alternative markets growth include global unlisted infrastructure, with AUM forecast to reach US$2.4 trillion in 2029, as the energy transition lifts fundraising and deals from 2027 onwards.
Global private real estate is also expected to continue its steady growth to US$2.7 trillion in size by 2029.
Moreover, Preqin predicted that AI is poised to be one of the factors buoying early-stage venture capital, with annualised AUM growth predicted at 13.2 per cent.
Additionally, global hedge funds AUM is forecast to surpass US$5.7 trillion by 2029, but outflows are predicted to impact performance-based growth. In fact, the researcher said hedge funds have the slowest forecast annualised growth rate over the 2023-end to 2029 period for all alternative asset classes, at 4.0 per cent.
