Alternative Assets: Funds Surpass $10 Trillion In AUM in 2019

A new Preqin report shows that the alternative assets industry has reached “14 figures.” Total AUM surpassed $10 trillion for the first time in 2019. The industry added at least $700 billion to that figure during the first six months of the year. The combination of long-term performance at funds, increasing asset prices, and expected returns helped bolster private asset management.

“We observed that financial markets were at a watershed moment, with high asset valuations, economic and political uncertainty, and a challenging period for investment returns ahead,” Mark O’Hare, CEO of Preqin, said in a statement. “Global markets have continued their upwards path, and the outlook is certainly challenging. Alternative assets have a good track record of delivering for their investors, but if they are to continue to do so, it will need to adapt and evolve in response to market challenges and opportunities.”

New Preqin Report: AUM Rises on Performance Expectations

Hedge funds helped bolster the alternative AUM with a return of 11.45% in 2019. That returned offered a solid boost from the losses of 3.06% experienced the year prior. However, the ongoing trade war and concerns about global economic growth did fuel investor redemptions. The report said “clear warning signs” existed for hedge funds with the net $82 billion pulled from funds for the first 11 months of the year.

Global private equity inflows remained strong as investors looked to capitalize in an era of low-interest rates. The report shows that private equity dry powder continued to rise over the year. Overall, assets under management in the space totaled $4.11 trillion by June 2019.

The report also explores manager sentiment for the year ahead. Roughly 45% of private equity fund managers expect a market correction in 2020. About 75% say that they think that investors will increasingly shift their focus from public markets to private investment vehicles.

“Looking ahead, investors are upbeat about their private debt portfolios,” the report said. “A significant 91% of investors we spoke to will either maintain or increase their allocation to private debt over the longer term.”

For more on the new Preqin report, visit here. 

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