With a few exceptions, alternative asset classes enjoyed a superb year in 2022 in terms of fundraising and performance, according to a quarterly report released Wednesday by data provider Preqin.
Private debt funds worldwide raised a record $225.7 billion in 2022, surpassing the $218.3 billion figure from the prior year. The asset class has increased total fundraising in each of the last five years, "showing continued strength of investor demand for private debt," Preqin said in the report.
In the fourth quarter, North American funds led demand by securing $19.5 billion of allocations, well ahead of Europe ($12.5 billion) and Asia ($1.5 billion).
With respect to real estate, Preqin said that last month there were 1,779 funds globally in the market, seeking to raise an aggregate of $512 billion — both record figures.
During the fourth quarter of 2022, 76 real estate funds were closed, raising a total of $46.9 billion, compared with 184 real estate funds closed in the fourth quarter of 2021, raising a combined $81.7 billion — which are records for a single quarter,
North America-focused real estate funds secured 85.7% of all capital during the fourth quarter of 2022, securing a total of $40.2 billion in allocations during the quarter.
However, almost two-thirds (59%) of real estate investors surveyed by Preqin expect this asset class to deliver weaker performance over the next 12 months, compared with the past 12 months.
For infrastructure, Preqin said that while the second half of 2022 marked the "slowest period for capital-raising in the last five years," 2022 still had $162 billion raised — a record fundraising year for the asset class.
Preqin said infrastructure funds raised $127 billion during the first six months of 2022, the "most active fundraising market ever."
However, the market "could not sustain such a pace of investor commitments," Preqin said, and consequently, the second half of the year "saw a more subdued level of activity."
With respect to hedge funds, Preqin said this asset class returned 2.6% in the fourth quarter, benefiting from market momentum, making it the first positive quarter for the asset class for the year.
Equity, event-driven, and credit strategies benefited the most from the partial recovery in the market, Preqin indicated, returning 4.1%, 3.5% and 2.6%, respectively, in the fourth quarter. Macro strategies represented the worst-performing category, returning 0.5% in the fourth quarter.
Preqin also noted that some 75% of investors plan to invest less than $50 million — the smallest allocation size — of fresh capital in hedge funds over the next 12 months. This figures nearly matches the 74% figure from the first quarter of 2022. These data suggest that investors' appetite for hedge funds "has not changed substantially over the past 12 months," the report said.
