Investments in alternative asset classes will reach $15.3 trillion by 2020, driven by demand from emerging sovereign wealth fund investors, PricewaterhouseCoopers (PwC) has predicted.
Its report—“Alternative Asset Management in 2020: Fast Forward to Centre Stage” —said demand for sustainable long-term returns would drive more investors away from mainstream equity and fixed-income investments.
The growth would mean assets in the alternatives space doubling in five years—Preqin’s latest data from January 2015 showed $7 trillion invested across hedge funds, private equity, venture capital, private real estate, and infrastructure.
Sovereign wealth funds in the Middle East have seen their assets swell despite falling commodity prices, and have hiked up their investments in real estate and infrastructure.
“The shift in global economic power from developed to developing regions will drive continued focus on sovereign investors, fast-growing institutions, and the emerging middle classes in new markets,” said Mike Greenstein, global alternative asset management leader at PwC.
PwC’s report forecasted that growing pools of assets would result in sovereign investors based across Asia, Africa, and South America as well as the Middle East.
“These groups of investors will increasingly seek branded multi-capability firms,” Greenstein added. “Durability and profitability will be essential credentials for any alternatives firm which has ambitions to follow—or lead—the industry to the centre stage of the investment landscape.”
In 2014, Preqin said hedge fund industry assets alone grew by $360 billion, accounting for more than half of the year’s increase in assets under management across all alternatives sectors.
Related: Sovereign Wealth Funds’ Real Estate Rush & Qatar SWF Said to Plan Overhaul of $304B Portfolio