Key Takeaways
- • Preqin forecasts global alternatives AUM to reach $29.2tn by 2029, up from $16.8tn at end-2023, implying 9.7% annualized growth; the firm's unofficial analysis projects the industry will exceed $30tn by 2030.
- • Growth is forecast to slow from the 10.5% annualized rate seen in 2017–2023, driven by softer expectations for private equity and venture capital markets.
- • Secondaries are forecast to be the fastest-growing alternatives segment at 13.1% annualized growth, supported by private wealth demand and weak exit markets.
- • Private equity AUM is projected to more than double from $5.8tn to $12.0tn by 2029, though its IRR is expected to fall to 13.4% from 15.5%.
- • Hedge fund AUM is forecast to surpass $5.7tn by 2029, but has the slowest projected growth of any alternative asset class at 4.0% annualized.
Summary
Preqin, the alternative assets data provider, published its Future of Alternatives 2029 report on September 18, 2024. The report forecasts the global alternatives industry to reach $29.2tn in assets under management by 2029, up from $16.8tn at the end of 2023. Although not part of the official report forecasts, Preqin's analysis indicates the industry is on course to exceed $30tn in AUM by 2030. The projected 9.7% annualized growth rate for 2023-end to 2029 represents a slowdown from 10.5% during 2017–2023, which Preqin attributes to softer expectations for private equity and venture capital markets.
Secondaries are forecast to be the fastest-growing alternatives area, with a projected annualized growth rate of 13.1%. Preqin attributes this to private wealth demand and weak exit markets. The secondaries market currently remains a buyer's market as investor portfolios face liquidity constraints, and Preqin expects continued demand from private wealth investors new to private markets.
Private equity is expected to remain the largest private capital asset class, with AUM forecast to rise from $5.8tn at end-2023 to $12.0tn by 2029, a 12.8% annualized rate. Preqin estimates private equity will represent approximately 6.0% of public and private equity markets by end-2024, a share expected to grow. Fundraising is expected to stay challenging before picking up from 2027, while projected private equity IRR of 13.4% is lower than the 15.5% achieved in 2017–2023. Private debt performance is forecast to improve, with its IRR rising to 12.0% from 8.1%, and private debt AUM is projected to grow from $1.5tn to $2.6tn by 2029.
Across other segments, Preqin expects AI to support early-stage venture capital AUM growth of 13.2% annualized, while late-stage venture is forecast at 8.1%. Global private real estate AUM is projected to reach $2.7tn by 2029 after a 2023 dip to $1.6tn. Unlisted infrastructure AUM is forecast to reach $2.4tn in 2029, aided by energy transition investment. Hedge fund AUM is forecast to surpass $5.7tn by 2029, though outflows are expected to weigh on performance-based growth, making it the slowest-growing alternative asset class at 4.0% annualized.
Cameron Joyce, Global Head of Research Insights at Preqin, said that while policy rates are expected to decline, macroeconomic conditions are likely to remain more challenging than in the pre-pandemic era, and that the slower growth forecast reflects this. He added that investors are navigating geopolitical risks as the world moves toward a multipolar order.
Secondaries are forecast to be the fastest-growing alternatives area, with a projected annualized growth rate of 13.1%. Preqin attributes this to private wealth demand and weak exit markets. The secondaries market currently remains a buyer's market as investor portfolios face liquidity constraints, and Preqin expects continued demand from private wealth investors new to private markets.
Private equity is expected to remain the largest private capital asset class, with AUM forecast to rise from $5.8tn at end-2023 to $12.0tn by 2029, a 12.8% annualized rate. Preqin estimates private equity will represent approximately 6.0% of public and private equity markets by end-2024, a share expected to grow. Fundraising is expected to stay challenging before picking up from 2027, while projected private equity IRR of 13.4% is lower than the 15.5% achieved in 2017–2023. Private debt performance is forecast to improve, with its IRR rising to 12.0% from 8.1%, and private debt AUM is projected to grow from $1.5tn to $2.6tn by 2029.
Across other segments, Preqin expects AI to support early-stage venture capital AUM growth of 13.2% annualized, while late-stage venture is forecast at 8.1%. Global private real estate AUM is projected to reach $2.7tn by 2029 after a 2023 dip to $1.6tn. Unlisted infrastructure AUM is forecast to reach $2.4tn in 2029, aided by energy transition investment. Hedge fund AUM is forecast to surpass $5.7tn by 2029, though outflows are expected to weigh on performance-based growth, making it the slowest-growing alternative asset class at 4.0% annualized.
Cameron Joyce, Global Head of Research Insights at Preqin, said that while policy rates are expected to decline, macroeconomic conditions are likely to remain more challenging than in the pre-pandemic era, and that the slower growth forecast reflects this. He added that investors are navigating geopolitical risks as the world moves toward a multipolar order.
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