Alternative Investments 2020

The report analyzes the evolution of the alternative investment industry, noting its growth from $1 trillion in 1999 to over $7 trillion in 2014. It identifies key macro drivers including the rise of emerging markets, aging populations in OECD countries leading to pension funding gaps, and low-interest-rate monetary policies. These forces are driving 'institutionalization,' where large investors build internal capabilities for direct investing and co-investing, and 'retailization,' where the shift from defined benefit to defined contribution pensions opens a massive new capital source from individual investors. The report forecasts a bifurcation of the industry into global asset managers, specialists, retail managers, start-ups, and funds of funds, while noting that increased regulatory transparency and compliance costs are creating higher barriers to entry.

• The alternative investment industry has seen massive growth, with assets under management increasing from $1 trillion in 1999 to more than $7 trillion in 2014, and is projected by PWC to nearly double to $13 trillion by 2020.
• Emerging markets are becoming critical both as investment opportunities and sources of capital; their share of global financial assets grew from 7% in 2000 to 18% in 2010, and they accounted for 50% of global GDP by 2016.
• Demographic shifts and funding gaps in developed world pension systems are driving higher allocations to alternatives. In the US, the funding shortfall for state public pension funds more than tripled to $1 trillion between 2004 and 2013.
• Post-crisis regulations, such as Basel III and the Volcker Rule, have discouraged banks from holding alternative assets or providing short-term funding to hedge funds, while increasing operational costs and barriers to entry for GPs.
• Institutionalization is leading large investors to move beyond traditional fund models toward direct investing, co-investing, joint ventures, and separately managed accounts (SMAs) to reduce costs and increase control.
• The shift from defined benefit (DB) to defined contribution (DC) pension plans is driving 'retailization,' shifting investment responsibility to individuals and potentially unlocking trillions in capital for the alternatives sector.
• The industry is bifurcating into five core business models: global alternative asset managers, specialists (regional or sector), retail alternative investment managers, start-up firms, and funds of funds.
• Funds of funds are under intense pressure as institutional LPs gain the expertise to invest directly, with hedge fund of funds capital falling from 45% of all hedge fund capital in 2006 to 25% in 2013.
• Environmental, social, and governance (ESG) considerations are becoming more central to capital allocation, with 67% of LPs considering ESG issues before committing capital to private equity buyout firms.

APA

World Economic Forum (2015). Alternative Investments 2020. http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_Future.pdf

Chicago

World Economic Forum. Alternative Investments 2020. 2015. http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_Future.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Alternative Investments 2020 |date=October 2015 |url=http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_Future.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 = oct, url = {http://www3.weforum.org/docs/WEF_Alternative_Investments_2020_Future.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }