Fundraising Trends in Alternative Asset Management: A 2024 Overview

As of May, fundraising for alternative assets accessible to retail investors has already surpassed $47.56 billion, setting a record pace for the year. According to a report from Robert A. Stanger & Co., this figure represents more than half of the total amount raised in 2023 and positions asset managers to potentially exceed the $104.8 billion raised in 2022. Projections suggest that the alternative investment sector could attract over $110 billion in new capital by the end of 2024.

Shifting Tides in Alternative Investments

Despite a decline in fundraising for non-traded Real Estate Investment Trusts (REITs) – a segment that peaked in 2022 – the industry remains robust. Year-to-date fundraising for non-traded REITs stands at $2.66 billion, indicating a gradual recovery compared to previous years. This slowdown is primarily attributed to challenges faced by the commercial real estate sector, prompting a shift in investor interest towards other asset classes.

Diversification in Fundraising Channels

During the first five months of 2024, non-traded Business Development Companies (BDCs) led the fundraising pack with a total of $14.88 billion, followed by Interval Funds at $11.39 billion, and various private placements in infrastructure and private equity at $8.71 billion. Private placement REITs also saw an uptick in fundraising, reaching $1.62 billion year-to-date through May, exceeding their 2023 total.

The Future of Alternative Fundraising

Robert A. Stanger’s chairman, Kevin T. Gannon, anticipates continued growth in fundraising for BDCs and interval funds, with projections of $25 billion each in 2024. Non-traded REITs and private placement REITs are expected to raise $10 billion each. This shift is driven by higher yields offered by BDCs and interval funds compared to non-traded REITs, making them more attractive to investors.

Top Fundraisers in the Alternative Investment Space

Key players in alternative fundraising include Blackstone, Cliffwater, Blue Owl Capital, Ares Management Corporation, and Kohlberg Kravis Roberts & Co. Blackstone leads the fundraising charts in non-traded BDCs and non-traded REITs, capturing over 30% of market share in both categories. Other prominent fundraisers include Blue Owl Capital and Apollo Global Management in the non-traded BDC space, and Ares Management Corp. and LaSalle Investment Management in non-traded REITs.

Conclusion

With the alternative investment landscape continuing to evolve, diversified fundraising strategies and a focus on higher yielding assets are driving growth in the sector. As investors seek alternatives to traditional offerings, asset managers are adapting to meet changing demands, reshaping the industry’s fundraising dynamics for the years to come.