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Alternative assets up by $690B through 2H 2014 [infographic]

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Alternative assets totaled 6.9 trillion at the close of June 2014, up from $6.2 trillion at the start of last year, according to new research.

Preqin discloses this finding in its “2015 Global Alternatives Reports,” which reveal significant growth in alternative assets held by private equity, hedge fund, private debt, real estate and infrastructure fund managers. Total industry assets now stand at

“Although the performance of hedge funds over the past year has been generally considered underwhelming, the asset class accounted for over half of the asset growth across alternatives, as investors continued to deploy capital in funds that offered attractive opportunities,” the report states. “Across the other asset classes, improving valuations have been seen as a primary driver of asset growth.”

Among the report’s key findings:

  • Total private equity assets under management stood at $3.8 trillion as of June 2014 (including private real estate and infrastructure funds), up from $3.5 trillion as of June 2013.

  • At the close of Jun3 2014 (the latest data available), $444 billion was distributed to investors, indicating 2014 is likely to surpass the $561 billion of capital returned to investors throughout the whole of 2013.

  • 54 percent of private equity fund managers feel there has been an increase in competition for deals compared to a year ago.

  • Hedge funds posted returns of 3.78 percent over 2014, the lowest average returns seen by the asset class since 2011. This compares to average returns of 12.25% seen in 2013.

  • Despite this, the hedge fund industry saw the highest growth in assets over the last year compared to other alternative assets, rising to $3.0 from $2.7 trillion at the end of 2013.

  • Private real estate industry assets totaled $742 billion as of June 2014, up from $657 billion as of June 2013, the rise driven mainly by improving valuations of unrealized assets.

  • Higher asset valuations are affecting new investment activity, with 66 percent of fund managers saying it is harder to find attractive investment opportunities at suitable prices in the current market compared to 12 months ago.

  • Annualized returns of private real estate funds grew 16.7 percent over the past three years.

  • Infrastructure assets are at a record high of $296bn as of June 2014, up from $244bn a year before.

  • More than half (56 percent) of investors express an interest in making direct investments into infrastructure assets over the coming year.

  • The average size of infrastructure funds closed in 2014 reached $1.0 billion, compared to $688 million in 2013.

See the infographic on the following page for additional highlights from the Preqin report.