• Private equity and private debt will be the biggest drivers of the alternative asset class’s growth, according to Preqin. The total AUM of alternatives is expected to climb to $17.16 trillion by the end of 2025.
• Private equity will be the fastest-growing asset class, with AUM increasing to $9.11 trillion in 2025, from $4.41 trillion in 2020, for a growth rate of 15.6% — the fastest-growing asset class over the next five years, Preqin’s research shows.
• Already the largest asset class, private equity will come to dominate the wider alternative asset industry. By the end of 2025, the asset class will account for 53% of all alternatives AUM, Preqin data shows.

*Assets Under Management (AUM) is the total market value of the
investments that a person or entity handles on behalf of investors.

• Private debt has emerged as a new frontier for credit investors in their search for yield and for borrowers and lenders seeking closer bilateral relationships. The market has grown tenfold in the past decade.
• Assets under management of funds primarily involved in direct
  lending surged to $412 billion at end-2020 including nearly $150 Billion in “Dry Powder” available to buy additional private debt assets—according to financial-data provider Preqin.
• Borrowers in this market tend to be smaller (averaging $30 million in EBITDA) and more highly leveraged than issuers in the broadly syndicated leveraged loan market – most are unrated.

• More than 2.1 Trillion in mortgage loans mature by 2025, creating an opportunity for commercial mortgage real estate investment trusts (REITs) and other private real estate direct lenders that finance income-producing properties like apartments, hotels, offices, industrial facilities and retail centers.
• For more than two decades, commercial real estate mortgages have delivered a higher total return with less volatility than investment grade corporate bonds, as measured by LifeComps Commercial Mortgage Loan Index and Barclays Investment Grade Corporate Bond Index.
• Investors looking for income solutions may want to consider mortgage REITs as part of a diversified portfolio.

• • Distressed debt balloons to $1 Trillion. Distressed debt in the U.S. has now quadrupled to nearly $1 Trillion, reaching levels not seen since 2008, as the collapse of oil prices, continued market volatility, and fallout from the coronavirus shutters entire industries across the globe. Investors with an eye on troubled assets have been waiting for a surge in distress after years of easy lending and low interest rates made potential targets scarce.
  • Available lenders for both private and institutional have decreased. These risk-averse actions from the US banks show that financial institutions are becoming cautious of lending to riskier businesses, and this gap of capital demand can be filled with non-bank lenders. However, the pool of available lenders putting out capital has decreased as they focus on workouts and other solutions to their non-performing loans resulting from the current Covid-19 pandemic. Many lenders continue to be impaired or permanently out of the market.