Alternative investments currently owned by U.S.-based individual and institutional investors
Approximate value of alternatives owned by large institutions
Liquidity transactions conducted in 2019 by large U.S. institutions
“40% of all US alternative assets are owned by high net worth individuals and small-to-mid-sized institutions.”
According to Prequin, U.S.-based individual and institutional investors currently own more than $3 trillion worth of alternative investments, with projections to exceed $4.5 trillion by 2023.
Large institutions, such as pension plans, endowments and foundations have routinely allocated a large portion of their investments to alternatives. This investor class owns nearly $2 trillion worth of alternatives and regularly benefits from access to liquidity through secondary market transactions.
In fact, more than $75 billion of liquidity transactions were conducted in 2019 by large U.S. institutions. Why do large institutions liquidate alternative assets? Because they understand that liquidity is opportunity– and they have the size and scale to liquidate alternatives on their own terms and timelines.
For high net worth individuals and small-to-mid-sized institutions, however, realizing liquidity from alternative investments has been much more difficult–and much more costly. As a result:
Many investors forego the opportunity to diversify their portfolios into alternative assets because they don’t want to be locked in for 10 to 12 years or longer.
Some investors hold on to alternative asset investments well beyond their peak performance periods.
Investors who choose to liquidate typically do so at a deep discount, through a long and costly process and only when absolutely necessary.
“An excess of $30 billion is the estimated additional unmet annual demand for liquidity among HNW individuals and small-to-mid sized institutions in the US.”
