Venture capital
Real estate
Natural resources
Hedge funds
Private debt
Private equity
Private equity
Venture capital
Private debt
Infrastructure
Natural resources
Hedge funds
Consistently strong returns, which enjoyed an abnormally large boost in 2021 and have beaten both the S&P 500 TR Index and MSCI World TR Index over the longer term, are just one factor behind the continued growth of private equity. Preqin forecasts that AUM will exceed $11.12tn by 2026, up from an estimated $5.3tn at the end of 2021. This represents a 15.9% CAGR between 2021 and 2026, which is slightly faster than the growth rate between 2015 to 2020 and well above the long-term trend.
Infrastructure
Real estate
Venture capital had a record year in 2021, with total capital invested by fund managers reaching $476bn, and performance breaking records. Exits also soared to $410bn. A growing asset class, venture capital has proven to be a vital component of institutional investor portfolios, with an attractive risk/return profile and high upside – as evidenced by short-term returns in particular.
The share of capital raised by the 50 largest funds continued to climb in 2021, diminishing the proportion secured by funds outside of the top group. While this is where we see the decline in number of funds closed,
a surprising trend has emerged when looking at the share of capital secured by the 10 largest funds. This new analysis of capital concentration may belie LPs' willingness to work with certain types of funds over others, and their evolving relationships with, and trust in, mega funds.
Growth Rate
$bn
Global real estate assets under management ($bn and growth rate), 2010-2027F
Global infrastructure assets under management ($bn and growth rate), 2010-2027F
Global private debt assets under management ($bn and growth rate), 2010-2027F
June 2017
Historical performance of hedge funds vs the 60/40 proxy portfolio, 2017-2022
Global venture capital assets under management ($bn and growth rate), 2010-2027F
Global natural resources assets under management ($bn and growth rate), 2010-2027F
Global private equity assets under management ($bn and growth rate), 2010-2027F
2027F
2021
2015
1,878.0
4,236.8
15.0%
12.5%
10.0%
7.5%
5.0%
0
10,000.0
8,000.0
6,000.0
4,000.0
2,000.0
0
2010-2015: 5.37%
Year
Growth Rate
2015-2021: 14.52%
2021-2027F:
Global real estate assets under management ($bn and growth rate), 2010-2027F
2027F
2021
2015
767.3
1,316.1
2010-2015: 12.57%
2015-2021: 9.41%
2,500.0
2,000.0
1,500.0
1,000.0
500.0
0
Global venture capital assets under management ($bn and growth rate), 2010-2027F
2027F
2021
2015
164.7
207.7
2010-2015: 18.40%
2015-2021: 3.94%
300.0
250.0
200.0
150.0
100.0
0
Historical performance of hedge funds vs the 60/40 proxy portfolio, 2017-2022
June 2022
June 2018
June 2017
June 2020
June 2021
June 2019
150
140
130
120
110
100
Index (100)
Global venture capital assets under management ($bn and growth rate), 2010-2027F
2027F
2021
2015
445.7
1,461.2
2010-2015: 8.77%
2015-2021: 21.88%
5,000.0
4,000.0
3,000.0
2,000.0
1,000.0
0
Global private debt assets under management ($bn and growth rate), 2010-2027F
2027F
2021
2015
508.7
1,219.2
2010-2015: 10.31%
2015-2021: 15.68%
3,000.0
2,500.0
2,000.0
1,500.0
1,000.0
0
Global infrastructure assets under management ($bn and growth rate), 2010-2027F
2027F
2021
2015
289.7
887.5
2010-2015: 13.59%
2015-2021: 20.51%
2,500.0
2,000.0
1,500.0
1,000.0
500.0
0
Year
Year
Year
Year
Year
$bn
Growth Rate
$bn
Story: The global macroeconomic picture has deteriorated significantly since we compiled our previous forecasts. We expect higher interest rates as a counter measure to inflation, combined with slower overall economic growth caused by monetary tightening, to negatively impact private equity as an asset class.
Story: With further interest rate hikes widely expected, we expect that private debt will attract more attention from traditional fixed income investors. Preqin forecasts private debt AUM will grow at a CAGR of between 2021-2027 to reach an all-time high of in 2027. Private debt is maturing as an asset class, and we see that in a slight easing in the pace of AUM growth.
Story: While some asset classes look set to experience a significant deceleration in their AUM growth, real estate could be relatively well protected. Assets under management (AUM) hit $1.32tn at the end of 2021 and is expected to increase by a CAGR of
between the end of 2021 and the end of 2027, to reach .
Story: Following a stellar fundraising year in 2021, global infrastructure is set to see its AUM gain ground on that of real estate by 2027, climbing from to of the larger real asset classes’ AUM over the period. The need for Europe to gain energy independence following Russia’s invasion of Ukraine is central to a long-term shift toward more intensive investment in renewable energy in the region. In the US, the recent signing of the Inflation Reduction Act, alongside the earlier Infrastructure Investment and Jobs Act by the Biden administration, provides a strong tailwind for unlisted infrastructure in North America.
Story: Despite the macroeconomic uncertainty and rising recession fears, the asset class has really come into its own since. The global investment opportunities within energy have been vast as transition to net zero is becoming more prominent, and Russia’s invasion of Ukraine has highlighted several oil and gas dependencies and has left many commodities markets with large supply deficits.
The impact of the current environment on natural resources will be significant. Based on our forecast, AUM for the asset class will grow on an annualized basis between 2021 ($207.7bn) and 2027 ( ). This is substantially than the growth between 2015 and 2021 (+3.94%).
Story: Since our previous Future of Alternatives report published in December 2020, a very challenging macroeconomic environment has emerged. Even with this, we see this asset class leading performance over our forecast period; to reach on an annualized basis from 2021 to 2027. As exit multiples come under pressure, performance is expected to decline. Not only this, but the more challenging exit environment will prompt GPs to extend holding periods, which will boost unrealized value. We expect this to push global venture capital from $1.46tn (as of Dec 2021) to new heights in AUM for 2027.
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Story: It is fair to say hedge fund allocators are momentum investors. Outflows follow periods of major market pullbacks, and vice versa. So the rate hikes of Q2 2022, along with geopolitical tensions and the war in Ukraine, put significant pressure on markets and forced investors to revisit their allocations. Our view is that the industry will experience more outflows and pullbacks before bouncing back.
2021-2027F:
2021-2027F:
2021-2027F:
2021-2027F:
2021-2027F:
AUM
Year
2027F
2021
2015
2021-2027F:
AUM
25.0%
20.0%
15.0%
10.0%
5.0%
0
3,000.0
2,500.0
2,000.0
1,500.0
1,000.0
0
Year
508.7
1,219.2
2010-2015: 10.31%
2015-2021: 16.68%
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Story: With further interest rate hikes widely expected, we expect that private debt will attract more attention from traditional fixed income investors. Preqin forecasts private debt AUM will grow at a CAGR of between 2021-2027 to reach an all-time high of in 2027. Private debt is maturing as an asset class, and we see that in a slight easing in the pace of AUM growth.
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2010-2015: 12.57%
2015-2021: 9.41%
2027F
2021
2015
2021-2027F:
767.3
1,316.1
AUM
15.0%
12.5%
10.0%
7.5%
5.0%
0
2,500.0
2,000.0
1,500.0
1,000.0
500.0
0
Year
Story: While some asset classes look set to experience a significant deceleration in their AUM growth, real estate could be relatively well protected. Assets under management (AUM) hit $1.32tn at the end of 2021 and is expected to increase by a CAGR of between the end of 2021 and the end of 2027, to reach .
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2010-2015: 13.59%
2015-2021: 20.51%
2027F
2021
2015
2021-2027F:
289.7
887.5
AUM
25.0%
20.0%
15.0%
10.0%
5.0%
0
2,500.0
2,000.0
1,500.0
1,000.0
500.0
0
Year
Story: Following a stellar fundraising year in 2021, global infrastructure is set to see it’s AUM gain ground on that of real estate towards 2027, climbing from to of the larger real asset classes’ AUM over the 6 years. In Europe, the need for the region to gain energy independence from Russia in light of the Ukraine war is central to a long-term shift towards more intensive investment in renewable energy. In the US, the recent signing of the Inflation Reduction Act alongside the earlier Infrastructure Investment and Jobs Act by the Biden administration provides a strong tailwind for unlisted infrastructure in North America.
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Story: Despite the macroeconomic uncertainty and rising recession fears, the asset class has really come into its own since. The global investment opportunities within energy have been vast as transition to net zero is becoming more prominent, and Russia’s invasion of Ukraine has highlighted several oil and gas dependencies and has left many commodities markets with large supply deficits. The impact of the current environment on natural resources will be significant and based on our forecast, AUM for the asset class will grow on an annualized basis between 2021 and 2027.
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Year
Index (100)
Year
Read the report
June 2018
June 2019
June 2020
June 2021
June 2022
150
140
130
120
110
100
Growth Rate
$bn
Growth Rate
$bn
Growth Rate
$bn
Growth Rate
$bn
Growth Rate
$bn
60/40 Proxy
All Hedge Funds
AUM
AUM
AUM
AUM
AUM
Read the report
Read the report
Read the report
Read the report
Read the report
Read the report
Only available in the report
Growth Rate
$bn
Growth Rate
$bn
Growth Rate
$bn
Growth Rate
$bn
Growth Rate
$bn
60/40 Proxy
All Hedge Funds
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
Only available in the report
2010-2015: 8.77%
2027F
2021
2015
2015-2021: 21.88%
2021-2027F:
445.7
1,461.2
AUM
25.0%
20.0%
15.0%
10.0%
5.0%
0
5,000.0
4,000.0
3,000.0
2,000.0
1,000.0
0
Year
2010-2015: 18.40%
2027F
2021
2015
2015-2021: 3.94%
2021-2027F:
164.7
207.7
AUM
25.0%
20.0%
15.0%
10.0%
5.0%
0
300.0
250.0
200.0
150.0
100.0
0
Year
growth
25.0%
20.0%
15.0%
10.0%
5.0%
0
25.0%
20.0%
15.0%
10.0%
5.0%
0
25.0%
20.0%
15.0%
10.0%
5.0%
0
15.0%
12.5%
10.0%
7.5%
5.0%
0
25.0%
20.0%
15.0%
10.0%
5.0%
0
growth
growth
growth
growth
growth
growth
growth
growth
growth
growth
growth
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