2019 proved to be a milestone year for alternative investments, with assets under management exceeding $10.3 trillion. Amidst the extended bull-run in traditional markets, investors continued to look to alternative strategies to supplement their portfolios and provide uncorrelated gains. While specific asset classes saw net-outflows, overall investor capital allocated to alternatives increased over $675 billion, more than seven percent.
2020? Off to an ominous start. In the grips of an unprecedented health crisis, coupled with macro and geopolitical uncertainties, all asset classes are likely in for a reset and reevaluation. And while the first half of this year may ultimately prove to be a lost few months, there will be a tremendous opportunity for alternative investment managers as things begin to normalize.
In the same way, passive investment strategies proliferated in the wake of the 2008 financial crisis, we believe with investors currently reeling from the volatility of public markets and a mixed performance for robo-advisors and automated allocation platforms that alternative investments and private markets are well-positioned for when investors become comfortable re-allocating capital. We highlight four themes for the ongoing changes we think will characterize the alternative investments space as the dust settles on the current environment:
- Expanding access for investors
- Investments in technology and innovation
- Mounting pressure on fund administrators and service providers
- The resurgence of the hedge fund allocations.