Private Markets Assets to Reach $65T by 2032: Bain
Private market assets are expected to expand at a rate that is more than twice as rapid as that of public assets, reaching a total of $65 trillion by 2032, according to research from Bain & Company. The company projects that over the next eight years, private assets will increase at a compound annual growth rate (CAGR) of 9% to 10%, making up 30% of all assets under management.
The firm’s findings come as wealth and asset management firms expand their private market products, while public market profitability has dropped by half.
“Wealth and asset managers are now favoring private markets because the business models that have dominated asset management for years have nearly run their course,” said Markus Habbel, global head of Bain’s wealth and asset management practice.
“Private assets constitute a much larger market than public assets and offer potentially higher yields, diversification, and in cases such as real estate—a hedge against inflation,” Habbel added.
Fee revenue from private market investments is expected to double to $2 trillion by 2032, with private equity and venture capital being the major asset categories. Other areas projected to expand into large asset classes include private alternative credit, which is expected to increase at a 10% to 12% CAGR, and solid infrastructure expansion, which is expected to continue at a 13% to 15% CAGR over the next decade.
Investor demand has also increased, with institutional investors predicted to raise their allocation to alternative assets by 10% CAGR between 2022 and 2032, bringing total assets under management to at least $60 trillion. Sovereign wealth funds, endowments, and insurance funds are seeking higher yields due to public market volatility and declining returns, it added.
Similarly, increased contributions from retail investors will increase the retail assets under management share from 16% in 2022 to 22% in 2032. “Individuals are drawn to the alternative asset market by the prospect of diversification and higher returns and are therefore willing to tolerate lower liquidity,” Habbel said.