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Alternatives Decoded

Navigating the World of Alternatives

Alternatives Decoded

Overview

Explore iCapital’s Alternatives Decoded for a wide-ranging and up-to-date analysis of the alternative investment landscape. Review the latest updates on absolute and relative market performance, assets under management (AUM), fund flow trends, deal activity, and much more. Gain insights into private equity, private credit, commercial real estate, infrastructure, hedge funds, structured investments, and annuities. 

iCapital - Alternatives Decoded Q4 2024-4 Overview
iCapital - Alternatives Decoded Q4 2024-4 Overview

Alternatives Decoded

Private Equity

Private equity has historically been able to generate consistent outperformance versus public equities with less downside. Today, the opportunity set is larger than ever, as private equity provides access to a larger universe of investment opportunities compared to public equity. We believe private equity offers investors an opportunity to tap into a large pool of innovation with multiple paths of value creation. 

iCapital - Alternatives Decoded Q4 2024-19 Private Equity
iCapital - Alternatives Decoded Q4 2024-19 Private Equity

Alternatives Decoded

Private Credit

Private credit is now a genuine alternative to bank lending and the syndicated market. An important part of the near-term investment thesis is favorable yields. However, in the longer term, the secular decline in lending by traditional credit providers holds the potential to increase the addressable market from primarily lending to many more forms of credit such as asset-backed and residential mortgage.  

iCapital - Alternatives Decoded Q4 2024-35 Private Credit
iCapital - Alternatives Decoded Q4 2024-35 Private Credit

Alternatives Decoded

Commercial Real Estate

Commercial real estate offers a broad set of diversified opportunities that provide low correlation to the public markets. In fact, the size of this market is often underappreciated. Despite some concerns about the state of real estate, many sectors have solid underlying fundamentals that can serve as a core source of income and potential price return 

iCapital - Alternatives Decoded Q4 2024 - CRE-2_Title
iCapital - Alternatives Decoded Q4 2024 - CRE-2_Title

Alternatives Decoded

Infrastructure & Other Real Assets

The appeal of infrastructure and real asset strategies is the low to negative correlation relative to stocks and bonds, and higher risk-adjusted returns due to the contractual, inflation-protected cash flow nature of the investments. Infrastructure, in particular, has gained attention in recent years with the recognition that there exists a significant “funding gap” underpinned by growing public deficits and increasing need for digital transformation and energy transition. 

iCapital - Alternatives Decoded Q4 2024-61 Infrastructure
iCapital - Alternatives Decoded Q4 2024-61 Infrastructure

Alternatives Decoded

Hedge Funds

Hedge funds employ several different strategies that can help position investors for various market conditions. Current trends, such as positive stock-bond correlations, elevated interest rates, and higher asset dispersion, can help improve risk-adjusted returns and offer substantial diversification benefits when adding hedge funds to a traditional portfolio. 

iCapital - Alternatives Decoded Q4 2024-72 Hedge Funds
iCapital - Alternatives Decoded Q4 2024-72 Hedge Funds

Alternatives Decoded

Structured Investments

The volume growth in structured investments has steadily increased as investors have looked for vehicles that offer upside participation and/or yield enhancement potential while maintaining a degree of principle protection. More recently, activity in the equities market has led to growth-oriented solutions outpacing their income-oriented counterparts. 

iCapital - Alternatives Decoded Q4 2024-83 Structured Investments
iCapital - Alternatives Decoded Q4 2024-83 Structured Investments

Alternatives Decoded

Annuities

The annuity industry has experienced sturdy growth in recent years due to rising interest rates and changing age demographics. We expect a growing part of the investing population to prioritize avoiding losses over earning gains and that should continue to provide a secular tailwind for annuities in the future. 

iCapital - Alternatives Decoded Q4 2024-93 Annuities
iCapital - Alternatives Decoded Q4 2024-93 Annuities

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iCapital - Alternatives Decoded Q4 2024 - Final-1

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

iCapital - Alternatives Decoded Q4 2024 - Final-1

Page Index

iCapital - Alternatives Decoded Q4 2024 - Final-2

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Page Index

iCapital - Alternatives Decoded Q4 2024 - Final-2

Alternatives Decoded

iCapital - Alternatives Decoded Q4 2024-Overview

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives Decoded

iCapital - Alternatives Decoded Q4 2024-Overview

Alternatives hold $16.7 trillion in assets under management globally across strategies

iCapital - Alternatives Decoded Q4 2024-Overview 1

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives hold $16.7 trillion in assets under management globally across strategies

iCapital - Alternatives Decoded Q4 2024-Overview 1

Alternatives have grown significantly and are projected to grow further in years ahead

iCapital - Alternatives Decoded Q4 2024-Overview 2

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives have grown significantly and are projected to grow further in years ahead

iCapital - Alternatives Decoded Q4 2024-Overview 2

Alternatives fundraising activity is stabilizing and increasing in certain asset classes

iCapital - Alternatives Decoded Q4 2024-Overview 3

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives fundraising activity is stabilizing and increasing in certain asset classes

iCapital - Alternatives Decoded Q4 2024-Overview 3

Dry powder has declined to $3.8 trillion as committed capital begins to get deployed globally

iCapital - Alternatives Decoded Q4 2024-Overview 4

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Dry powder has declined to $3.8 trillion as committed capital begins to get deployed globally

iCapital - Alternatives Decoded Q4 2024-Overview 4

Deal momentum is rebounding to more normalized levels as GPs put dry powder to work

iCapital - Alternatives Decoded Q4 2024-Overview 5

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Deal momentum is rebounding to more normalized levels as GPs put dry powder to work

iCapital - Alternatives Decoded Q4 2024-Overview 5

Alternatives offered strong outperformance vs. traditional 60/40 portfolio over time

iCapital - Alternatives Decoded Q4 2024-Overview 6

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives offered strong outperformance vs. traditional 60/40 portfolio over time

iCapital - Alternatives Decoded Q4 2024-Overview 6

Over the next decade, alternatives are projected to outperform their public counterparts

iCapital - Alternatives Decoded Q4 2024-Overview 7

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Over the next decade, alternatives are projected to outperform their public counterparts

iCapital - Alternatives Decoded Q4 2024-Overview 7

Several private market strategies offer higher yields than those available in public markets

iCapital - Alternatives Decoded Q4 2024-Overview 8

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Several private market strategies offer higher yields than those available in public markets

iCapital - Alternatives Decoded Q4 2024-Overview 8

Alternatives can be a powerful diversifier due to their low correlation to public markets

iCapital - Alternatives Decoded Q4 2024-Overview 9

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives can be a powerful diversifier due to their low correlation to public markets

iCapital - Alternatives Decoded Q4 2024-Overview 9

Alternatives offer higher returns and lower volatility vs. a traditional 60/40 portfolio

iCapital - Alternatives Decoded Q4 2024-Overview 10

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Alternatives offer higher returns and lower volatility vs. a traditional 60/40 portfolio

iCapital - Alternatives Decoded Q4 2024-Overview 10

Manager selection has been an important driver of return outcomes in alternatives

iCapital - Alternatives Decoded Q4 2024-Overview 11

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Manager selection has been an important driver of return outcomes in alternatives

iCapital - Alternatives Decoded Q4 2024-Overview 11

Several private market strategies are inexpensive relative to public markets and history

iCapital - Alternatives Decoded Q4 2024-Overview 12

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Several private market strategies are inexpensive relative to public markets and history

iCapital - Alternatives Decoded Q4 2024-Overview 12

Private clients to increase alternatives allocation from $4 trillion to $13 trillion by 2032

iCapital - Alternatives Decoded Q4 2024-Overview 13

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private clients to increase alternatives allocation from $4 trillion to $13 trillion by 2032

iCapital - Alternatives Decoded Q4 2024-Overview 13

Opportunity to increase allocation is sizable given low portfolio allocation & advisor use

iCapital - Alternatives Decoded Q4 2024-Overview 14

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Opportunity to increase allocation is sizable given low portfolio allocation & advisor use

iCapital - Alternatives Decoded Q4 2024-Overview 14

Private Equity

iCapital - Alternatives Decoded Q4 2024-Private Equity

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private Equity

iCapital - Alternatives Decoded Q4 2024-Private Equity

Private equity is the largest asset class within alternatives and has grown significantly

iCapital - Alternatives Decoded Q4 2024-Private Equity 1

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity is the largest asset class within alternatives and has grown significantly

iCapital - Alternatives Decoded Q4 2024-Private Equity 1

Since 2000, fewer companies went public as they have stayed private for longer

iCapital - Alternatives Decoded Q4 2024-Private Equity 2

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Since 2000, fewer companies went public as they have stayed private for longer

iCapital - Alternatives Decoded Q4 2024-Private Equity 2

Private companies outnumber publicly traded ones, across most revenue segments

iCapital - Alternatives Decoded Q4 2024-Private Equity 3

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private companies outnumber publicly traded ones, across most revenue segments

iCapital - Alternatives Decoded Q4 2024-Private Equity 3

Private markets offer investors an opportunity to tap into a larger pool of innovation

iCapital - Alternatives Decoded Q4 2024-Private Equity 4

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private markets offer investors an opportunity to tap into a larger pool of innovation

iCapital - Alternatives Decoded Q4 2024-Private Equity 4

Private equity outperformed public equities over various time horizons

iCapital - Alternatives Decoded Q4 2024-Private Equity 5

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity outperformed public equities over various time horizons

iCapital - Alternatives Decoded Q4 2024-Private Equity 5

Private equity delivered more consistently positive returns with fewer negative years

iCapital - Alternatives Decoded Q4 2024-Private Equity 6

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity delivered more consistently positive returns with fewer negative years

iCapital - Alternatives Decoded Q4 2024-Private Equity 6

Private equity performance improved when investing during downturn year vintages

iCapital - Alternatives Decoded Q4 2024-Private Equity 7

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity performance improved when investing during downturn year vintages

iCapital - Alternatives Decoded Q4 2024-Private Equity 7

Private equity fund managers have multiple ways to create value vs. public markets

iCapital - Alternatives Decoded Q4 2024 - Final-26

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity fund managers have multiple ways to create value vs. public markets

iCapital - Alternatives Decoded Q4 2024 - Final-26

Private equity valuations have stabilized and are lower than public markets in the U.S.

iCapital - Alternatives Decoded Q4 2024-Private Equity 9

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity valuations have stabilized and are lower than public markets in the U.S.

iCapital - Alternatives Decoded Q4 2024-Private Equity 9

Fund managers have adjusted to higher cost of capital by reducing the use of leverage

iCapital - Alternatives Decoded Q4 2024-Private Equity 10

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Fund managers have adjusted to higher cost of capital by reducing the use of leverage

iCapital - Alternatives Decoded Q4 2024-Private Equity 10

Realization of further rate cuts may help improve levered company financials

iCapital - Alternatives Decoded Q4 2024-Private Equity 11

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Realization of further rate cuts may help improve levered company financials

iCapital - Alternatives Decoded Q4 2024-Private Equity 11

Private equity exit activity is recovering given higher valuations in public markets

iCapital - Alternatives Decoded Q4 2024-Private Equity 12

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private equity exit activity is recovering given higher valuations in public markets

iCapital - Alternatives Decoded Q4 2024-Private Equity 12

Capital markets activity is gradually improving across both IPO and M&A markets

iCapital - Alternatives Decoded Q4 2024-Private Equity 13

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Capital markets activity is gradually improving across both IPO and M&A markets

iCapital - Alternatives Decoded Q4 2024-Private Equity 13

Extended holding periods increase the need for sources of liquidity

iCapital - Alternatives Decoded Q4 2024-Private Equity 14

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Extended holding periods increase the need for sources of liquidity

iCapital - Alternatives Decoded Q4 2024-Private Equity 14

Growth in private equity secondaries is driven by strong supply/demand dynamics

iCapital - Alternatives Decoded Q4 2024-Private Equity 15

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Growth in private equity secondaries is driven by strong supply/demand dynamics

iCapital - Alternatives Decoded Q4 2024-Private Equity 15

Private Credit

iCapital - Alternatives Decoded Q4 2024-Private Credit

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private Credit

iCapital - Alternatives Decoded Q4 2024-Private Credit

Private credit assets under management have grown rapidly to record levels

iCapital - Alternatives Decoded Q4 2024-Private Credit 1

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private credit assets under management have grown rapidly to record levels

iCapital - Alternatives Decoded Q4 2024-Private Credit 1

Secular decline in bank lending is being driven by regulation, capital requirements

iCapital - Alternatives Decoded Q4 2024-Private Credit 2

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Secular decline in bank lending is being driven by regulation, capital requirements

iCapital - Alternatives Decoded Q4 2024-Private Credit 2

Growth in private equity buyout strategies drives further demand for private credit

iCapital - Alternatives Decoded Q4 2024-Private Credit 3

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Growth in private equity buyout strategies drives further demand for private credit

iCapital - Alternatives Decoded Q4 2024-Private Credit 3

Private credit strategies historically outperformed public fixed income sectors

iCapital - Alternatives Decoded Q4 2024-Private Credit 4

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private credit strategies historically outperformed public fixed income sectors

iCapital - Alternatives Decoded Q4 2024-Private Credit 4

Direct lending offered favorable risk-adjusted returns versus public fixed income

iCapital - Alternatives Decoded Q4 2024-Private Credit 5

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Direct lending offered favorable risk-adjusted returns versus public fixed income

iCapital - Alternatives Decoded Q4 2024-Private Credit 5

Private credit drawdown risk is moderated by buy-and-hold nature, fewer dislocations

iCapital - Alternatives Decoded Q4 2024-Private Credit 6

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private credit drawdown risk is moderated by buy-and-hold nature, fewer dislocations

iCapital - Alternatives Decoded Q4 2024-Private Credit 6

Risk premium, complexity and market inefficiencies provides a backdrop for attractive yields

iCapital - Alternatives Decoded Q4 2024-Private Credit 7

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Risk premium, complexity and market inefficiencies provides a backdrop for attractive yields

iCapital - Alternatives Decoded Q4 2024-Private Credit 7

Direct lending spreads recently widened, moving closer to historical excess spread

iCapital - Alternatives Decoded Q4 2024-Private Credit 8

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Direct lending spreads recently widened, moving closer to historical excess spread

iCapital - Alternatives Decoded Q4 2024-Private Credit 8

Income has been a steady component of private credit returns over time

iCapital - Alternatives Decoded Q4 2024-Private Credit 9

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Income has been a steady component of private credit returns over time

iCapital - Alternatives Decoded Q4 2024-Private Credit 9

Credit losses for private credit have been in line with high yield and bank loan issuers

iCapital - Alternatives Decoded Q4 2024-Private Credit 10

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Credit losses for private credit have been in line with high yield and bank loan issuers

iCapital - Alternatives Decoded Q4 2024-Private Credit 10

Private credit coverage ratios are improving, which could help keep defaults in check

iCapital - Alternatives Decoded Q4 2024-Private Credit 11

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Private credit coverage ratios are improving, which could help keep defaults in check

iCapital - Alternatives Decoded Q4 2024-Private Credit 11

Lower volatility, high income led to more consistently positive results for private credit

iCapital - Alternatives Decoded Q4 2024-Private Credit 12

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets

Hedge Funds

Structured Investments

Annuities

Important Information

Lower volatility, high income led to more consistently positive results for private credit

iCapital - Alternatives Decoded Q4 2024-Private Credit 12

Commercial Real Estate

iCapital - Alternatives Decoded Q4 2024-Real Estate

Alternatives Decoded

Overview

Private Equity

Private Credit

Commercial Real Estate

Infrastructure & Other Real Assets