Distressed debt performance to improve, alternative assets to cross $30 trln by 2030 - Preqin
- All three major U.S. stock indexes slightly red
- Energy leads S&P 500 gainers; materials weakest group
- Euro STOXX 600 index off ~0.5%
- Dollar ~flat; gold, crude inch higher; bitcoin off ~1%
- U.S. 10-Year Treasury yield rises to ~3.69%
DISTRESSED DEBT PERFORMANCE TO IMPROVE, ALTERNATIVE ASSETS TO CROSS $30 TRLN BY 2030 - PREQIN
Alternative asset data provider Preqin is out with some forecasts on growth for the global alternative asset markets over the next few years, with the firm predicting stronger performance from private debt markets.
Preqin sees distressed debt performance to average a 13.4% IRR (internal rate of return) between the end of 2023 and 2029. Private debt overall is expected to post an average IRR of 12% from 8.1%.
Alternative assets in general have grown in popularity over the past few years as investors sought investment opportunities aside from stocks and bonds amid market volatility and central bank uncertainty.
Private credit markets in particular grew in popularity after high-profile woes at U.S. regional banks saw businesses seek alternative sources of funding.
The overall alternative asset market is predicted to reach over $29 trillion by the end of 2029, Preqin forecasts, from $16.8 trillion at the end of 2023.
Still, that forecast represents an annualized growth rate of 9.7% between 2023-2029, slowing from 10.5% annual growth between 2017-2023, Preqin says.
"While policy rates are expected to decline, macroeconomic conditions are likely to remain more challenging than during the pre-pandemic era, and our forecast of slower industry growth reflects that," said Cameron Joyce, Global Head of Research Insights at Preqin.
Meanwhile, global hedge fund assets have the slowest forecast annual growth rate of any alternative asset class, at just 4% over the next five years.
Preqin sees private equity assets more than doubling to $12 trillion by the end of 2029, although they note its IRR is likely to slow to 13.4% from 15.5% between 2017 - 2023 as fundraising remains a challenge.
Secondaries are predicted to be the fastest growing alternative market, according to Preqin, benefiting from new investor interest in alternative assets.
(Lisa Mattackal)
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