Alt Investments

Despite Testing Markets At Year End, Alternative Investment AuM Reached A Record In 2015

Tom Burroughes Group Editor 27 January 2016

Despite Testing Markets At Year End, Alternative Investment AuM Reached A Record In 2015

While the latter months of 2015 saw markets slide, the size of assets held in hedge funds, private equity and real estate cracked a collective record last year, figures show.

Financial markets may have ended on a dull note for many investors last year but as far as the alternatives sectors of private equity, hedge funds and property were concerned, assets reached a combined record of $7.4 trillion in 2015.

Figures from Preqin, the research firm, show that such assets rose from $6.9 trillion in 2014.

The industry as a whole added $193 billion in AuM through the first half of 2015, more than the $149 billion growth seen in the whole of 2014. The aggregate value of the asset portfolios held by private capital fund managers is continuing to rise as general partners put more capital to work, Preqin said.

Hedge funds saw a challenging year in 2015. Even so, their combined assets under management grew from $3.0 trillion to $3.2 trillion. Total hedge fund AuM grew by 13.3 per cent in 2014 as funds added $355 billion in total assets; this rate of growth halved in 2015 with $178 billion worth of assets added, or an increase of 5.9 per cent. 

Private equity
Private equity funds distributed a record $475 billion back to investors in 2014, and returned a further $189 billion in H1 2015. Buyout and venture capital funds raised a combined $199 billion in 2015. 

Some 88 per cent of investors expect to commit more or the same amount of capital to private equity in 2016 as in 2015. However, the greatest challenge facing investors in 2016 is asset valuation, at least according to 70 per cent of respondents to a Preqin survey. 

Hedge funds
The hedge funds industry saw $71.5 billion added through fresh capital inflows in 2015. Notably, these gains happened entirely in the first half of the year, while outflows happened in the second half as markets turned sour. 

“Hedge funds had a disappointing year of performance with the Preqin All-Strategies Hedge Fund benchmark returning 2.02 per cent, down from the 4.65 per cent gains made in 2014,” the firm said.

Some 44 per cent of fund managers believe they missed their performance goals last year and a third (33 per cent) saw below-expected results on their investments.

Property
Private real estate funds had an average rate of return of 16 per cent in the three years to June 2015, similar to higher-risk buyout and venture capital strategies. These funds made record distributions of $187 billion in 2014, and returned a further $103 billion to investors in H1 2015. 

 

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