Alternative Assets 2023: A New Chapter in Investment Strategy
Breaking From Tradition: The Surge of Alternative Assets
The financial crisis of 2007-09 marked a significant turning point for investors, who began incorporating alternative assets into their portfolios as a means of diversification. The core factors driving this shift included low correlation with traditional equities and bonds, the potential for greater returns, and a hedge against inflation, creating a new, evolved investment strategy.
Since 2003, the alternative assets sector has expanded tremendously from managing a modest $3 trillion to a staggering $15 trillion in 2019 – a 400% growth over 16 years. This momentum shows no signs of slowing, with the industry projected to oversee USD 18 trillion by 2024.
Revenue Growth and the Future Projections
In terms of revenue, alternative assets have steadily increased their share of the total revenue from all asset classes (including active, passive, and others). This share has climbed from 29% in 2003 (estimated at $30 billion) to 46% in 2019 (estimated at $37 billion). Future projections put this figure at an impressive $162 billion by 2024.
2023: A Pivotal Year for Alternative Investments
As we head further into 2023, professional asset managers are confident that this will be a monumental year for alternative investments. 67% of institutional investors expect a portfolio with 20% allocated to alternatives to outperform the traditional 60/40 investment mix of equities and bonds.
Here’s what you can do to tap into this trend:
- Keep a close eye on the market: Trends suggest substantial investments in green energy and increased institutional moves towards alternative assets.
- Diversify your portfolio: Considering alternative assets can offer opportunities similar to traditional fixed income while unlocking new return streams.
- Stay informed and adaptable: With trillions of dollars changing hands, staying updated is crucial to making the most out of your investments.
The Rise and Rise of Alternative Investments
Industry insights from Preqin highlight that the total dollar value in alternative asset classes has more than doubled between 2015 and 2021 and is expected to reach $23 trillion by 2026. This shift marks a new chapter in the investment landscape, and while there are concerns about a potential recession, there is also optimism about the opportunities in the alternative asset space for the rest of 2023.
The continued growth of alternative assets has placed them squarely in the mainstream investment arena. As we navigate through 2023, monitoring these shifts and considering alternative assets could be the key to resilient and diversified portfolios.
Remember, investing involves continual learning and staying abreast of market trends. Don’t be afraid to seek professional advice to make the most of these opportunities.
The story of alternative assets is still unfolding, and we look forward to sharing more insights and trends to guide your investment journey in 2023 and beyond.