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Alternative Market Briefing

Unlisted natural resources AUM to hit $271bn in 2025 with a CAGR of 5.1%

Thursday, November 12, 2020

Laxman Pai, Opalesque Asia:

Preqin predicts unlisted natural resources assets under management (AUM) will hit $271bn in 2025. The projected 5.1% compound annual growth rate (CAGR) over the period is well below our 9.8% forecast for all alternatives, but higher than growth rates for real estate, hedge funds, and infrastructure.

"Despite AUM growing at a CAGR of 5.1% through to 2025, natural resources will remain an asset class for specialists - with innovation and ESG the keys to value creation," said the report.

In 2020 COVID-19 undermined demand for energy and dislocated global supply chains across all industries, but as economies adapt to the new environment, industries will need to invest in new technologies if countries are to achieve their ambitious decarbonization targets.

"Investors in natural resources have a steady commitment to the asset class," said Jordan Poulter, a researcher at Preqin.

More than a fifth (22%) of investors surveyed by Preqin do not expect allocations to change through to 2025, with the proportion planning to increase allocations (19%) a little larger than those looking to decrease (15%), with roughly half of the respondents not investing in the class at all.

The collapse of oil prices, particularly Brent oil futures, may indicate that we have passed peak oil. In fact, BP's 2020 Energy Outlook says oil demand could fall by as much as 50% over the next two decades.

Technology will drive investment in other ......................

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