Alternative Investments 2020

The report examines the alternative investments industry, which manages approximately $7 trillion across more than 10,000 firms. It focuses on core asset classes—hedge funds, private equity buyouts, and venture capital—detailing their business models, sources of returns, and roles in the financial system. The document analyzes how these investments impact the real economy through innovation, employment, and corporate governance, while also discussing the rise of 'shadow lending' and the influence of regulatory reforms in the US and Europe.

• The alternative investments industry has grown to a global scale, with over 10,000 firms managing approximately $7 trillion in assets under management.
• Hedge funds represent the largest core alternative asset class, managing over $3 trillion, with a high geographic concentration in the US (70%) and Europe (21%).
• Private equity buyout firms manage $1.4 trillion, typically acquiring controlling stakes in companies using debt that accounts for 50-70% of the purchase price.
• Venture capital firms manage over $400 billion, with the US attracting nearly 70% of global investments; the model relies on a few high-return investments (>10x capital) to offset frequent losses.
• There is a significant trend toward 'shadow lending' or bank disintermediation, where non-bank actors are projected to replace banks in providing $3 trillion of lending by 2018.
• Institutional investors provide the majority of capital for alternatives, with over 70% coming from pension funds, sovereign wealth funds, and endowments/foundations.
• Alternative investments impact the real economy by driving innovation; for instance, 22% of US GDP is traced to companies that were originally venture-backed.
• The impact of private equity on employment is mixed, showing higher rates of both job creation and destruction, resulting in a net 1% decline in employment relative to previous owners.
• Alternative investors improve corporate governance by aligning interests; private equity boards are more likely to set rigorous performance metrics and meet more frequently (monthly) than public boards.
• Regulatory changes in the US and Europe, such as the Dodd-Frank Act and Basel III, may impact the industry by reducing market liquidity, increasing costs, and creating barriers to entry.

APA

World Economic Forum (2015). Alternative Investments 2020. http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_An_Introduction_to_AI.pdf

Chicago

World Economic Forum. Alternative Investments 2020. 2015. http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_An_Introduction_to_AI.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Alternative Investments 2020 |date=July 2015 |url=http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_An_Introduction_to_AI.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2015alternative, author = {{World Economic Forum}}, title = {{Alternative Investments 2020}}, institution = {World Economic Forum}, year = {2015}, month = jul, url = {http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_An_Introduction_to_AI.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }