Alternative assets to hit more than $17trn in AuM by 2025

Written by Adam Cadle

10/11/2020

Alternative assets will hit more than $17trn in AuM by 2025, up from $10.74trn at the end of 2020, latest data has shown.

According to Preqin, private equity and private debt will be the biggest drivers of growth, respectively increasing their assets by 16% and 11% annually, and private equity will come to account for around half of the total alternatives industry.

Regionally, Asia-Pacific is emerging as the biggest growth market: with AuM focused on the region increasing by a CAGR of 25%, total assets are set to hit almost $5trn by the end of 2025.

David Lowery, head of research insights at Preqin said: “Private markets are a core part of the investment landscape, and have seen an incredible rate of growth in size and influence in recent years. The fundamentals are strong: alternatives funds keep offering investors strong, uncorrelated long-term returns, even through the sustained low-interest rate environment and volatile market cycles of recent years. Investors in turn have been committing more and more capital to alternatives, and this is unlikely to slow in the coming years. In fact, our model shows that growth will continue, buoyed by an uptick in private equity activity and booming participation in Asia-Pacific. It’s a very exciting time to be a part of the industry.”

Real estate and hedge funds are set to see much slower growth, according to Preqin. “Real estate assets will grow from $1.05trn to $1.24trn between 2020 and 2025, while hedge funds will increase from $3.58trn to $4.28trn in the same period.

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