Key Takeaways
- • Alternative investment funds raised $740bn so far in 2023, a 27% decline from $1.02tn raised in the same period of 2022, according to Preqin data cited by the Financial Times.
- • Preqin's 2022 forecast that alternatives assets under management would double between 2021 and 2026 to $26tn now looks at risk given the year-to-date slowdown.
- • Alternative funds raised $1.5tn across the whole of 2022, providing a full-year benchmark against which 2023 fundraising is measured.
- • Volatility, geopolitical tensions and interest rates are cited as the main factors behind cooling institutional investor interest in the alternatives sector.
Summary
Fundraising across alternative investments has slowed markedly in 2023, despite earlier expectations of rapid growth in allocations to hedge funds, private equity, private credit and real estate. According to a Financial Times report citing Preqin data, alternative investment funds have raised $740bn since the start of the year, down 27% from $1.02tn over the same period in 2022.
The slowdown contrasts with Preqin's earlier forecast, issued in 2022, that the alternatives sector would double in size between 2021 and 2026, reaching assets under management of $26tn. Alternative funds raised $1.5tn over the full year 2022, so the current pace of capital formation would need to accelerate considerably to remain consistent with that trajectory.
The article attributes the cooling of institutional investor interest to a combination of market volatility, geopolitical developments and interest rate movements, all of which have affected markets over the past year. The figures highlight a more cautious allocation environment for institutional investors and alternative managers as they navigate a higher-rate backdrop.
The slowdown contrasts with Preqin's earlier forecast, issued in 2022, that the alternatives sector would double in size between 2021 and 2026, reaching assets under management of $26tn. Alternative funds raised $1.5tn over the full year 2022, so the current pace of capital formation would need to accelerate considerably to remain consistent with that trajectory.
The article attributes the cooling of institutional investor interest to a combination of market volatility, geopolitical developments and interest rate movements, all of which have affected markets over the past year. The figures highlight a more cautious allocation environment for institutional investors and alternative managers as they navigate a higher-rate backdrop.
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