Introduction

When a diamond is formed, carbon atoms come under high temperatures and crushing pressure, fall into efficient alignment, and ultimately give way to a valuable gemstone and one of the hardest naturally occurring substances.

In some ways, the alternative fund industry is going through a similar process. Capital continues to flow in from a wider array of sources, increasing pressure on how managers realize returns and meet the demands of their investors.The industry itself has already come a long way in a relatively short period of time. In earlier days, specialist fund managers leaned into distributing their products to a small group of sophisticated investors prepared to make a modest fixed term investment. Fast forward to today, and projections indicate that the alternative asset industry will grow from $10.7 trillion to some $17 trillion by 2025¹, despite a temporary slowdown caused by COVID-19, with private capital (primarily private equity and private debt strategies) expected to lead the way. Asia-Pacific is predicted to grow particularly fast, with a forecasted compound annual growth ratio (CAGR) of 25.5% over the next four years - more than twice the forecasted global rate of 9.8%².It's important to remember that these investment tailwinds come with the expectation of returns, and from a more diverse population of limited partners. The premium on capturing alpha is going up, with a two-sided cost impact of spending capital to support new strategies, and a rising cost of providing investors a compelling and transparent experience. Alternative asset managers' response to these forces will determine when and how the industry evolves. Will they rise to the challenge of these pressures? And will we see a shinier, more aligned, more mature alternatives sector emerge on the other side?

As an alternative asset manager, which pressures does your firm feel the most? Please select all that apply.

Expanding product set
Supporting expansion into new asset classes
Supporting expansion into new markets
Creating greater efficiency in operations
Improving distribution support
Supporting changing data/technology needs
Meeting regulatory requirements

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