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A version of this article appeared in CNBC’s Inside Alts newsletter, a guide to the fast-growing world of alternative investments, from private equity and private credit to hedge funds and venture capital. Register to receive future editions, straight to your inbox.
Investment in alternatives is expected to reach $32 trillion by 2030, driven largely by the growth of wealthy investors, according to a report from Preqin.
Total assets under management in alternative sectors – including private equity, hedge funds, real estate, venture capital, infrastructure, natural resources and private credit – are expected to increase 60% over the next five years, according to the private markets research firm.
According to the report, a resumption of IPOs and mergers, lower interest rates and the AI boom will lead to a new growth cycle in private markets. Private credit assets are expected to double to $4.5 trillion by 2030.
Yet even as deals and exits begin to increase, fundraising from institutional investors continues to decline due to the lack of distributions and poor performance of many funds. Total fundraising for private equity has fallen from a peak of $676 billion in 2023 to less than $500 billion this year, according to the report.
To fuel the next wave of growth, the private equity industry is betting on wealthy investors. The report says that high-net-worth individuals (generally defined as investors with $30 million or more), family offices and private wealth managers will account for at least 30% to 40% of capital in flagship funds “in future cycles.”
“With institutional rebalancing, private wealth can provide an alternative source of capital,” the report says. “Many top executives expect a doubling of private capital raised in the near term.”
The big question is whether family offices and the ultra-rich also follow institutional investors.
Family offices’ allocations to private equity fell from 26% of their portfolios in 2023 to 23% in 2025, according to a Goldman Sachs survey of family offices. At the same time, family offices have increased their allocation to public equities.
Family offices are also focusing more on direct investments, bypassing funds and buying stakes in companies directly, according to surveys.
With deals returning, some surveys suggest family offices and ultra-wealthy investors are planning to start investing more. A BNY Wealth survey showed that 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.