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A version of this article appeared in CNBC’s Inside Alts newsletter. This newsletter is your guide to the fast-growing world of alternative investments, from private equity and private credit to hedge funds and venture capital. Sign up to receive future editions directly to your inbox.
According to a report from Preqin, investment in alternatives is expected to exceed $32 trillion by 2030, driven largely by the growth of high-net-worth investors.
Total assets under management in alternatives, including private equity, hedge funds, real estate, venture capital, infrastructure, natural resources and private credit, are expected to grow by 60% over the next five years, according to the private market research firm.
A resurgence in IPOs and mergers, lower interest rates and the AI boom will all drive a new growth cycle for private markets, according to the report. Private credit assets are expected to double to $4.5 trillion by 2030.
However, despite trading activity and exits starting to increase, funding from institutional investors continues to decline due to lack of distributions and poor performance in many funds. Total private equity funding has plummeted from a peak of $676 billion in 2023 to less than $500 billion this year, according to the report.
To drive the next wave of growth, the private equity industry is betting on wealthy investors. The report says ultra-high net worth individuals (typically defined as investors with assets of $30 million or more), family offices and private wealth managers will account for at least 30% to 40% of flagship fund capital “in future cycles.”
“Rebalancing the system could allow personal wealth to serve as an alternative source of capital,” the report said. “Many large business owners expect the amount of personal capital raised in the short term to double.”
The big question is whether family offices and the ultra-high net worth will follow the lead of institutional investors.
According to Goldman Sachs’ family office research, family offices’ private equity allocations fell from 26% of their portfolios in 2023 to 23% in 2025. At the same time, family offices increased their allocations to public equities.
Family offices are also focusing more on direct investing, bypassing funds and buying shares in companies directly, according to the study.
Some surveys indicate family offices and ultra-high-net-worth investors plan to start investing more as deal activity returns. According to a study by BNY Wealth, 55% of family offices surveyed plan to increase their allocation to private equity funds over the next 12 months, the highest of any asset class.
