Alternative investments’ share of global asset management revenues will rise by half in the next six years, a new report from McKinsey & Co. shows.
Currently, alternatives account for about 30% of asset-management revenues, the report says. That will grow to 40% by 2020—even though the industry will account for just 15% of all assets under management.
“For asset managers, the continued rise of alternatives represents one of the largest growth opportunities of the next five years,” McKinsey wrote. And those who ignore the trend stand to lose big.
“The broader asset-management industry has been stuck in the old world of traditional asset return products,” McKinsey’s Ju-Hon Kwek told Bloomberg News. “Those are folks who are going to be squeezed” by the growth of alternatives.
McKinsey dismissed the notion that investors are losing interest in hedge funds and private equity funds, due to high fees and disappointing performance. “To the contrary, McKinsey research clearly indicates that the boom is far from over.”