The global alternative assets fund managers hold a record US$7.4 trillion in combined assets under management (AUM) in 2015, up from US$6.9 billion in the prior year, according to a new report issued by research firm Preqin.
The private capital industry added US$193 billion in AUM through H1 2015, more than the $149bn growth seen in the whole of 2014. The aggregate value of the portfolios of assets held by private capital fund managers is continuing to rise as GPs put more capital to work.
Hedge funds saw a challenging year in 2015, but combined assets under management grew from $3.0tn to $3.2tn despite performance concerns. Total hedge fund AUM grew by 13.3% over 2014 as funds added $355bn in total assets; this rate of growth halved in 2015 with just $178bn worth of assets added, an increase of 5.9%.
Private capital funds, which include private equity, venture capital, private debt, real estate, infrastructure and natural resources, reached US$4.2 trillion in combined AUM, while hedge fund industry grew to almost US$3.2 trillion.
Private equity funds distributed a record US$475 billion back to investors in 2014, and returned a further US$189 billion in the first half of 2015.
Buyout and venture capital funds raised a combined US$199 billion in 2015, while 88% of investors expect to commit more or the same amount of capital to private equity in 2016.
Hedge funds saw US$71.5 billion AUM added through fresh capital inflows in 2015. These gains were made entirely during the first half, as the second half last year saw a net industry outflow of US$4.8 billion.
That is because hedge funds had a disappointing year of performance with the Preqin All-Strategies Hedge Fund benchmark returning 2.02%, down from the 4.65% gains made in 2014.
Forty-four percent of hedge fund fund managers believe their performance objectives were not met in 2015, and 33% of investors saw below-expected performance on their investments.
Private real estate funds have an average rate of return of 16% in the three years to June 2015, similar to higher-risk buyout and venture capital strategies.
Real estate funds made record distributions of US$187 billion in 2014, and returned a further US$103 billion to investors in the first half of 2015.