Here is an exclusive sneak peek into our 2023 alternative fund recap now available for download.
From our annual report, 'Fund Trends in alternatives,' published by Alts Marketplace, we've identified a growing disparity between the increasing number of registered funds each year and the declining median asset value of said funds.
The number of private funds managed by registered investment advisers as reported on Form ADV increased significantly from 2018 to march 2023 by approximately 68%, an increase from 58,054 to 97,538 funds, resulting in a compounded annual growth rate of 11%.
Similarly, the corresponding total gross assets managed increased significantly from 2018 to March 2023 by approximately 59%, an increase from $16,946 billion to $27,019 billion, for a compounded annual growth rate of 10%.
Although the total number of funds and gross assets increased significantly during this period, the growth rates may not tell the full story. Comparing these two data points we can calculate the median gross assets per fund (the middle value of a dataset when it is ordered from least to greatest). The results show that the median fund size during this period declines by 36%, from $33 million to $21 million, at a compounded annual average decline of 13%.
The substantial increase in the overall number of funds, accompanied by a trend of lower median gross assets, could be influenced by a multitude of factors. These factors might encompass economic and market dynamics, evolving investor preferences and their demand, heightened competition among advisors, diversified strategic approaches, and other variables. While we may not have a comprehensive understanding of these drivers, conducting further analysis could potentially offer greater clarity.
Author: Lawson stringer - senior vice president
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Source: SEC ADV database