Obstacles to growth in the alternatives space in 2025
Fund managers are anticipating several significant obstacles to growth in the alternatives space over the next 12 months, with political uncertainty emerging as the most prominent concern, cited by 28.8% of respondents. “This reflects the growing impact of geopolitical instability and domestic political shifts on global markets, and the challenge of navigating these uncertainties as they affect investment decisions and market conditions,” said Michael Johnson.
Fundraising challenges also rank highly, identified by 19.2% of respondents. With ongoing economic volatility, securing new capital is expected to remain difficult as investors adopt a more cautious approach, especially in sectors facing headwinds. This aligns with concerns about the broader macroeconomic environment, including the potential for a recession, which 15.2% of respondents listed as a key obstacle.
Global regulation was noted by 18.4% of fund managers as a significant barrier to growth. As regulatory bodies around the world tighten their frameworks, particularly in areas like environmental, social, and governance (ESG) standards, compliance is expected to remain a significant burden for funds.
Performance concerns also rank among the key barriers, with 15.2% of respondents worried about whether their funds will meet investor expectations, especially in a more volatile economic environment. Underperformance could lead to difficulties in retaining investor confidence and securing future capital.
Interestingly, competition and consolidation were viewed as relatively minor obstacles, with only 3.2% of respondents seeing them as the biggest challenges to growth. This indicates that while consolidation is happening across the alternatives industry, it is not yet perceived as a major barrier to growth in the near term.
Reflecting on these findings, Michael commented,
Political instability and regulatory hurdles continue to weigh heavily on the minds of fund managers. As we enter a period of potential economic turbulence, the ability to adapt quickly to fundraising challenges and global regulatory changes will be key to driving growth in the alternatives space.
These results illustrate the complexity of the growth environment for alternatives, where external forces such as political uncertainty and global regulation are set to shape the landscape for the year ahead.