Alternative Assets Will Double in Size by 2025
Substitute asset classes specifically real assets, private equity, and private debt will more than double in volume, reaching $21.1trn by 2025, accounting for 15% of global AuM (assets under management) as investors diversify to decrease volatility and aim specific revenue and risk outcomes, according to research by PwC
PwC foresees investment establishments will offer capital in sectors such as trade finance, peer-to-peer lending, and infrastructure. They will be extra active in all facets of lending activities typically undertaken by banks, e.g. arranging a group of investors for large infrastructure projects.
PwC also expects rising growth in real assets — chiefly infrastructure and to a lesser extent, real estate, private equity, and private credit. Over the four years from 2016-2020, PwC estimates a 27.5% per annum progress rate in infrastructure, dragging to 15% from 2020-2025. Infrastructure assets will increase more than fivefold, from $0.6trn in 2016 to $3.4trn in 2025.
Carrying on with the sturdy development they experienced in 2015, assets in alternatives observed a 5.1% rise by the end of 2016 in terms of assets under management, according to studyfrom Willis Towers Watson.
Luba Nikulina, global head of manager research at Willis Towers Watson, says alternatives are continuously growing in popularity, with investors remaining under pressure to look foreffective ways of diversification in an environment of lower expected earnings from outmoded asset classes.
“These strategies often come with greater complexity and require superior risk management. We see this as linked to the growth in assets managed by managers in the bottom half of our list, suggesting that investors favor smaller investment houses with specialist investment skills.”
While according to PwC asset management partner, Rob Mellor, alternative strategies are prevalent with fund managers.
“We have seen the rise of the multi-strategy alternative manager and an increasing trend for traditional active managers looking to add alternative strategies to their product range; all of this is driving an appetite for M&A activity in the alternative asset management space,”