The alternative assets industry is set to expand across all asset classes over the next five years. The levels of growth expected within the asset classes understandably vary, with the smaller asset classes set for sharper growth, while the more established markets are expected to continue to attract larger amounts of capital.
As at December 2017, the private equity and hedge fund industries represent a combined $6.7tn, or 75%, of the $8.8tn alternative assets industry. While industry participants are predicting this share to decrease over the next five years to 69%, as other alternative asset classes look set for faster growth, these industries are expected to contribute the majority (56%, $2.9tn) of the growth in dollar terms over the next five years.
The private debt market is predicted to double in size, reaching $1.4tn in 2023 and, in doing so, overtake the real estate market to become the third largest alternatives industry. Only the hedge fund industry is expected to grow at a slower pace than the real estate industry over the next five years, at 31% and 50% respectively.
Representing $0.7tn (8%) of the alternative assets industry, the real assets universe is predicted to be the fastest-growing area of alternatives over the next five years. Driven by natural resources, real assets are expected to represent 13% of the $14tn alternatives industry by 2023 as an industry of $1.8tn, 1.5x the size of the combined natural resources and infrastructure markets of 2018.
Download your copy of the Preqin: The Future of Alternatives here.