The alternatives investment industry is set to grow by $2.5trn in the next three years, fuelled by growth in hedge funds and private equity, according to Fidante Partners.
According to a report by Fidante Partners The Global Alternative
Investment Market - Where it is and where it's going, the market share of the alternative investments has more than doubled from 2.4% in 2000 to 6.2% in 2017.
The largest growth in assets under management over the past three years has been seen in hedge funds, despite underperformance and high fees. There has been a shift within hedge funds away from those investing in distressed securities towards fixed income and equity long-only ones.
"The growth in alternatives was very much driven by hedge funds between the start of the millennium and the financial crisis. Though hedge funds have subsequently been hampered by lacklustre performance and adverse publicity around high fees (which has acted to bring them down), they remain a very important part of the alternatives universe," the report said.
The only area expected to decline was natural resources thanks to the end of the commodities 'super cycle' with outflows of $76m.
"As the commodity supercycle seems to point downwards in the foreseeable future and tax advantages of some natural resource investment vehicles in the US have declined after the most recent tax reform, this projected decline in natural resource investments should not come as a surprise."
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