Alternative investment assets will increase by 59% to $14 trillion by 2023, alternatives data provider Preqin reported this week.
The number of fund management firms active globally will grow by 21% over the next five years to 34,000.
Preqin based its prediction on surveys conducted in June with 300 fund managers and some 120 institutional investors.
Alternative assets will expand across all assets classes, it said, with smaller ones set for sharper growth while more established ones haul in bigger amounts of capital.
Private equity will slip past hedge funds as the biggest alternative asset class, growing by 58% from $3.1 trillion in 2017 to $4.9 trillion in 2023. Hedge funds will grow by 31%, rising from $3.6 trillion to $4.7 trillion.
Private debt will move into third place, with $1.4 trillion under management, overtaking real estate, which will have $1.2 trillion under management.
Real assets, which make up a tiny 8% proportion of the alternative assets sector, will be the fastest-growing area over the next five years, according to Preqin. Driven by natural resources, real assets will represent 13% of the $14 trillion alternative industry by 2023 with $1.8 trillion.
The infrastructure market will bring up the rear, doubling its assets to $1 trillion by 2023.
Which allocators will be the biggest sources of capital by 2023?
Sources of capital have become more fragmented globally with an increase in the number of sovereign wealth funds and family offices since the financial crisis, Michael Sterling, chief executive of Sterling Infrastructure wrote in the report.