Key Takeaways
- • PwC projects the alternative investment industry—encompassing hedge funds, private equity, and real assets—will grow fivefold to reach at least $13.6 trillion over the next five years (through 2020).
- • Alternative assets will represent slightly more than 50% of global asset management industry revenue within five years, signaling a structural shift in capital allocation and portfolio construction.
- • Private markets are expected to deliver more than half of the global asset management industry's revenues by 2030, driven by sustained investor demand for alpha generation amid historically low interest rates.
- • Successful investors will need to adopt focused capital deployment strategies, prioritizing quality, location, and adaptability rather than traditional asset class silos.
- • Tech giants including Google, Microsoft, Facebook, and Amazon—four of the five largest companies by market cap—are entering the real estate market, reshaping competitive dynamics and introducing new entrants to the alternative asset space.
Summary
PwC's research indicates a dramatic structural realignment in global asset management, with alternative investments poised for substantial growth over the coming five years. The alternative investment industry—defined to include hedge funds, private equity, real assets, real estate, infrastructure, and credit/private debt—is projected to reach at least $13.6 trillion, representing a fivefold expansion from current levels. This expansion reflects a fundamental shift in how institutional capital is being deployed across global markets.
The growth trajectory reflects persistent demand drivers rooted in the macroeconomic environment. Historically low interest rates and the enduring effects of quantitative easing have rendered traditional asset classes expensive relative to their expected return profiles, compelling institutional investors and asset managers to seek alpha generation through alternative strategies. As PwC notes, investors are increasingly moving toward a private equity approach to investing over longer time frames, driven by an intense search for yield and income enhancement in a compressed-return environment.
The competitive landscape is becoming increasingly fragmented as non-traditional market participants enter the space. Major technology companies—Google, Microsoft, Facebook, and Amazon—are making material commitments to real estate markets, capturing market share and disrupting traditional real estate and infrastructure investing. This influx of capital from unexpected sources signals both the attractiveness of alternative assets and the need for established asset managers to differentiate through specialized expertise and adaptability.
Within this evolving landscape, the composition of asset management revenues is undergoing transformation. Alternative assets are expected to represent slightly more than 50% of industry revenue within five years, with private markets projected to deliver more than half of global asset management revenues by 2030. Success in this environment will require investors to move beyond established asset class silos and embrace discrete return and risk analysis. PwC emphasizes that investors who focus on quality, location, and adaptability will be best positioned to capture value, while asset managers deploying capital in more focused efforts will be advantaged relative to broader, generalist approaches.
The growth trajectory reflects persistent demand drivers rooted in the macroeconomic environment. Historically low interest rates and the enduring effects of quantitative easing have rendered traditional asset classes expensive relative to their expected return profiles, compelling institutional investors and asset managers to seek alpha generation through alternative strategies. As PwC notes, investors are increasingly moving toward a private equity approach to investing over longer time frames, driven by an intense search for yield and income enhancement in a compressed-return environment.
The competitive landscape is becoming increasingly fragmented as non-traditional market participants enter the space. Major technology companies—Google, Microsoft, Facebook, and Amazon—are making material commitments to real estate markets, capturing market share and disrupting traditional real estate and infrastructure investing. This influx of capital from unexpected sources signals both the attractiveness of alternative assets and the need for established asset managers to differentiate through specialized expertise and adaptability.
Within this evolving landscape, the composition of asset management revenues is undergoing transformation. Alternative assets are expected to represent slightly more than 50% of industry revenue within five years, with private markets projected to deliver more than half of global asset management revenues by 2030. Success in this environment will require investors to move beyond established asset class silos and embrace discrete return and risk analysis. PwC emphasizes that investors who focus on quality, location, and adaptability will be best positioned to capture value, while asset managers deploying capital in more focused efforts will be advantaged relative to broader, generalist approaches.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.