What is the size of alternative asset management industry?

Between now and 2020, alternative assets are expected to grow to US$13.6 trillion in our base scenario and to US$15.3 trillion in our high case scenario . High performance of capital markets driven by accommodative monetary policies and stable GDP growth would push alternative investments towards the high case scenario.

How big is the alternative investment market?

In fact, just 20 years ago, alternative investments represented $4.8 trillion, or 6%, of global assets under management, and hedge funds constituted much of that allocation. Today, alternative investments are larger than ever, sitting at $22 trillion in assets under management, or 15% of global assets under management.

Who is the largest alternative asset manager?

Blackstone is the world's largest alternative asset manager, with more than $1 trillion in AUM.

Why are alternative assets growing?

Alternative investments — financial assets that do not belong to conventional investment categories such as stocks, bonds or cash — have grown in popularity in recent years, especially as investors seek to diversify their portfolios .

Alternates are expected to become 20% of India’s total AUM by 2026: Anup Maheshwari, Co-founder and CIO, 360 ONE Asset (2024)

Synopsis

Savvy investors diversify across asset classes like equities, fixed income, real estate, and alternative investments. Alternative assets include private equity, venture capital, and various debt instruments. In India, Alternative Investment Funds (AIFs) fall into three categories: startups and infrastructure, diverse trading methods, and others. Alternative investments represent 12% of India's AUM and are the fastest-growing segment with a 24% compound growth rate. Anup Maheshwari predicts that by 2026, alternatives could constitute 20% of India's total AUM, which is expected to double in the next five years. Alternatives offer diversification, higher return potential, and unique opportunities with risk management benefits.

Alternates are expected to become 20% of India’s total AUM by 2026: Anup Maheshwari, Co-founder and CIO, 360 ONE Asset (1)

Savvy investors understand that true diversification goes beyond random allocation. It involves intentional distribution across asset classes like equities, fixed income, real estate, and alternative investments. Amid global uncertainties such as geopolitical tensions and crises like the pandemic and oil fluctuations, alternative investments are gaining traction in India. Wealth managers advocate for diversifying into these assets for stability and enhanced portfolio returns. This strategic move acknowledges the resilience and potential of alternative investments in navigating volatile markets.

What are alternates?

Alternative assets are privately held, unlisted, and illiquid, differing from traditional financial instruments and physical assets like real estate or gold. They include private equity, venture capital, various debt instruments, and real estate investments like REITs and InvITs.

In India, Alternative Investment Funds (AIFs) fall into three categories: Category 1 focuses on startups and infrastructure, Category 3 engages in diverse trading methods, and Category 2 includes others that don't fit these criteria.

Where is India’s alternate sector heading in the future?

ET Spotlight

The alternates make 12% of India’s AUM compared to 17% in the rest of the world

Alternative investments represent 12% of India's AUM, while globally, they make up 17%. As of March 2023, SEBI reports the AIF sector's industry size in India is Rs 8.3 trillion. Anup Maheshwari from 360 ONE notes that alternatives are the fastest-growing segment in AUM, with a 24% compound growth rate. He predicts that by 2026, alternatives could constitute 20% of India's total AUM, which is expected to double from Rs. 50 lakh crores to Rs100 lakh crores in the next five years. This shift towards alternatives aligns more with the current global allocation. Anup discusses the significance of alternatives in a portfolio in Elemental, a wealth management series by 360 ONE.

ET Spotlight

Watch Anup Maheshwari talk about the importance of alternates in one’s portfolio.

What benefits can alternatives bring to your portfolio?
Alternative investments offer:

Diversification
Higher return potential
Unique opportunities with risk management benefits.

This is because they diversify portfolios, reducing correlation with traditional assets like stocks and bonds. Despite higher risks, they can yield better risk-adjusted returns, especially in sectors like private equity and venture capital. Alternatives provide access to specialised markets and industries like renewable energy. They also serve as a hedge against specific risks, such as inflation, enhancing overall portfolio resilience.

How do alternates fit in your portfolio?
For guidance on optimising your portfolio with alternative investments, consult experts like 360 ONE. Their deep market knowledge and seasoned investment team can help select the best risk-adjusted options. Leveraging their expertise ensures strategic integration of alternative investments, boosting your portfolio's resilience and performance in wealth management.

To learn more about alternate assets, click here .

(This article is generated and published by ET Spotlight team. You can get in touch with them on [email protected])

Alternates are expected to become 20% of India’s total AUM by 2026: Anup Maheshwari, Co-founder and CIO, 360 ONE Asset (2024)

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