Wealthy investors expected to drive $32 trillion alternatives boom

Alternative investments are projected to reach $32 trillion by 2030, driven by wealthy investors, a recovery in IPOs/M&A, and AI, despite a current decline in institutional fundraising for private equity. The industry is strategically pivoting to ultra-high-net-worth individuals and family offices, anticipating they will provide 30-40% of future flagship fund capital. While some data indicates a recent decrease in family office private equity allocations, other surveys suggest a strong intent from this segment to increase their investments in the asset class over the next 12 months.

Analysis

Alternative investments are projected to expand significantly, reaching $32 trillion by 2030, representing a 60% increase over the next five years. This growth is primarily fueled by wealthy investors, a recovery in IPOs and M&A activity, anticipated falling interest rates, and the ongoing AI boom. Private credit, in particular, is forecast to double to $4.5 trillion by 2030, underscoring its strong growth trajectory within the alternatives landscape.

Despite this optimistic outlook, institutional fundraising for private equity has seen a sharp decline, falling from a peak of $676 billion in 2023 to under $500 billion this year, attributed to poor fund performance and a lack of distributions. In response, the private equity industry is strategically pivoting towards ultra-high-net-worth individuals, family offices, and private wealth managers, expecting them to contribute 30% to 40% of flagship fund capital in future cycles.

Investor sentiment among wealthy individuals presents a mixed picture. A Goldman Sachs survey indicates a decrease in family office private equity allocations from 26% in 2023 to 23% in 2025, alongside an increase in public stock holdings and a focus on direct investments. Conversely, a BNY Wealth survey reveals that 55% of family offices plan to increase their private equity allocations over the next 12 months, marking the highest intent across all asset classes.

Key Decisions for Investors

• Investors should assess opportunities in alternative asset classes, especially private credit, given the projected $32 trillion growth by 2030 driven by macro tailwinds, including falling interest rates and AI advancements
• Focus on private market funds demonstrating strong capital-raising capabilities from private wealth channels and a clear path to improved distributions, as institutional fundraising faces headwinds
• Closely monitor evolving allocation strategies of family offices and ultra-high-net-worth individuals, recognizing their increasing influence and potential for direct investments in the private markets