Global alternative assets under management (AUM) across all alternative classes is expected to grow 9.8 per cent through to 2025, and the bulk of the growth in private markets is expected to take place in Asia Pacific, according to market research firm Preqin.
In its latest forecast, Preqin expects global AUM in alternatives to increase by 60 per cent at the end of 2025, outpacing the global GDP and inflation. Private equity already the largest asset class with $4.42 trillion in AUM, is expected to more than double over the next five years.
Private debt assets, on the other hand, is seen to grow 11.4 per cent per year while all other asset classes are expected to grow at a rate of 5 per cent per year or less.
In Asia Pacific, Preqin sees AUM growing from $1.6 trillion this year to $4.97 trillion in 2025 on the back of the region’s lower penetration rate and faster GDP growth than in the US and Europe.
AUM growth is expected to be strongest in the private equity market, according to David Lowery, Head of Research Insights at Preqin, who penned the blog post on the predictions.
“Private equity assets have displayed their resilience during times of economic stress and have generated returns superior to other asset classes. With the market less mature in fast-growing Asia, a large proportion of the market growth will come from that region,” Lowery said.
In a separate post, Preqin said it expects PE and venture capital funds to fly higher as institutional investors continue to turn away from actively managed public equity funds.
“We predict that PEVC will swallow an even larger share of the alternatives pie, with its proportion of alternatives AUM rising from 42 per cent in 2019 to 53 per cent in 2025,” Preqin said, adding that low-interest rates will continue to support the financing of buyout funds.