Alts set to see largest increase in fundraising

Alternative asset classes are expected to see the largest increase in fundraising in 2024, according to a survey of fund managers commissioned by Dublin-based third-party management firm Carne Group.

The survey of 201 alternative assets, equity and fixed income fund managers in 10 countries that collectively manage $1.6tn, found that private equity was the asset class that fund managers expect to see the largest increase in fundraising in 2024. This was followed by renewable energy, hedge funds, private debt and real estate.

Meanwhile, in a separate but related survey of 201 wealth managers and institutional investors including pension funds, insurers and family offices who collectively have $1.7tn in AuM, 71% of respondents said they expected the organisation they work for to increase their allocation to private equity by 10% or more in 2024. Some 70% said this about their allocation to private debt.

The research found that a major challenge for alternative fund managers is an expected increase in consolidation in their markets driven by fundraising challenges and increasing regulatory costs.

Over the next five years, 84% of fund managers surveyed expect the level of consolidation in the real estate fund management sector to increase. The corresponding figures for the private equity, private debt and hedge fund sectors are 69%, 64% and 68% respectively.

John Donohoe, Carne Group chief executive said: “The appetite for alternative assets classes amongst investors is increasingly rapidly, fuelled by a growing desire from investors to diversify their portfolios and to manage volatility.”

“However, the challenges facing alternative fund managers around growing regulatory complexity makes it more difficult for them to capitalise on increased investor appetite for their funds. This is leading to a significant increase in alternative fund managers outsourcing functions to specialist third parties to help them tackle these issues.”

The surveys were conducted in December 2023 and January 2024.

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