• Private equity, renewable energy and hedge funds expected to see the biggest increase in flows of new capital in the alternatives sector

• The pressure on fund managers to reduce costs is set to rise    

• Fund managers set to focus on investment capability and make greater use of third-party service providers to meet challenges

 

LONDON – 6^th February 2024: New research from Carne Group, a leader in fund regulation and governance solutions for the asset management industry, reveals fund managers expect strong growth in 2024.

 

Carne Group commissioned research with over 200 alternative asset, equity and fixed income fund managers in 10 countries that collectively manage $1.6 trillion.  Eighty-three per cent of managers surveyed expect the flow of new capital into their funds and segregated accounts to increase in 2024 –  with 8% expecting significant growth.

 

Nearly three-quarters (73%) of the fund managers surveyed expect that the number of new funds launching in their sector this year will be higher than in 2023 – 14% expect a dramatic increase in the number of launches. Similarly, 62% of fund managers surveyed expect the number of segregated accounts launched in 2024 to be higher than in 2023 (14% expect it to be significantly higher).

 

Focus on asset classes

When the fund managers surveyed were asked to select the alternative asset classes they expect to see the biggest increase in fundraising in 2024, private equity was selected by most, followed by renewable energy and hedge funds.

 

Overall, 28% of the fund managers interviewed expect the level of fundraising by private equity firms in 2024 to increase dramatically over the year when compared to 2023, and 50% anticipate a slight rise. The corresponding figures for renewable energy are 30% and 31%, and for hedge funds they are 27% and 29% respectively.

 

Expected level of capital fund raising in 2024 compared to 2023

Asset class	Increase dramatically	Increase slightly	Stay the same	Fall
Renewable energy	30%	31%	31%	3%
Private equity	28%	50%	21%	1%
Hedge funds	27%	29%	37%	3%
Real estate	29%	54%	15%	1%
Private debt	25%	41%	30%	3%
Infrastructure	24%	43%	29%	3%
Venture capital	21%	38%	36%	4%
Commodities	16%	42%	37%	3%
Crypto/digital assets	16%	50%	32%	1%

 

John Donohoe, CEO at Carne Group said: “Alternative asset classes have benefited greatly from recent stock market volatility, which has resulted in a desire for investors to diversify their portfolios more. Some 82% of the fund managers we surveyed expect market volatility to increase in 2024.  This helps to explain why many alternative managers remain optimistic about attracting further capital as their asset classes can have less short-term valuation volatility.

 

“Respondents noted that fund managers face a complex regulatory environment with an increasing focus on corporate governance, issues around reporting, fees and expenses as well as operational costs. This means they need to place an even greater focus on improving their levels of efficiency, whilst maintaining the highest levels of transparency and reporting for investors.”

 

Move to external expertise

The research also found that 29% of fund managers interviewed believe their organisation may switch to an alternative third-party service provider over the next year for one or more of the services they need. Managers value the flexibility and agility an outsourced provider can offer. As margins in the industry continue to come under pressure, cost saving and technology are also high on managers’ lists for outsourcing services.

 

Overall, 23% of those surveyed expect a dramatic increase in the use of third-party management companies between now and 2026, with 56% anticipating a slight rise here. The three main reasons for this identified by the research are the ability to launch different product sets, speed to market and ensuring that they can offer stronger fiduciary management of the fund.

 

John Donohoe CEO at Carne Group continued: “Fund managers are increasingly looking to rely on specialist third parties to provide a range of services for them – from regulatory compliance to specialist expertise in the launch of new products like ETFs and private asset funds.

 

“Our survey shows that the expertise of the investment team is the key selling point for asset managers. As complexity and cost pressures mount, managers will focus their efforts on investment management and distribution, and work with third-party providers to enable them to remain lean, agile and competitive.”

 

About the research

Carne Group commissioned the market research company Pureprofile to interview 201 senior executives working for fund managers in the UK, the US, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland and Denmark with a total of $1.577 trillion assets under management. The fund management sectors covered include hedge funds, private equity, real estate, infrastructure, private debt, equity, fixed income and multi-asset classes.

 

Those interviewed included COOs, CFOs CROs, Heads of Product, Heads of Compliance, Heads of Legal and senior fund managers.

 

The survey was conducted in December 2023 and January 2024.

 

About Carne Group

Founded in 2004, Carne Group is an international company that has established itself as an expert and pioneer in fund regulation and governance solutions, allowing it to become Europe’s leading third-party management company and trusted partner to the fund management industry

Carne works with more than 650 clients – from boutique fund managers to global institutional investors –  supporting funds distributed in over 160 countries and overseeing more than $2 trillion assets under management. Carne employs more than 700 employees worldwide. https://www.carnegroup.com/

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

 

For further information, please contact:

Phil Anderson

phil@perceptiona.com

+44 (0)7767 491519

– or –

Noreen Biddle Shah

noreen.biddleshah@carnegroup.com

+44 (0)7391 055521