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North America tightens grip on global alternative assets under management (AUM)

Preqin data shows that North American private capital AUM was $7.67tn, making up over 57% of the $13.43tn AUM globally, as of the end of June 2023* - the latest data available. When including the hedge fund asset class alongside the private markets' asset classes**, this rises to 62% of global alternatives AUM. $3.66tn, or 81%, of the overall $4.53tn hedge fund AUM globally was shared by North America-based managers as of the end of 2023. This share has grown since 2017 and Preqin analysts note that European managers have seen their global share of AUM fall over the same period.

North America's consolidation in alternatives can also be seen by the proportion that US-based private equity and venture capital (VC) AUM compose the total US equities market. 4.7tn (9%) of the $50.9tn US equities market (public and private) was in US-based private equity and VC AUM, as per Preqin data from June 2023.

North American-based fundraising historically high in 2023

Private markets fundraising recovered in 2023, from a subdued second half of 2022. $850bn was raised by final closes across 1,607 North American funds by the end of 2023. Historically, that is a very high figure, and made up over 68% of fundraising globally in 2023 ($1.24tn).

Trends in North American private debt

North America is where private debt strategies have evolved and become more diversified. Direct lending has grown to become the largest private debt strategy by AUM in North America since 2008, following the tightening of bank lending regulation. By the end of June 2023, direct lending strategies accounted for 44% of overall AUM, up from 15% at the end of 2008.

Charles McGrath, AVP, Research Insights, at Preqin says, "The alternatives assets industry has continued to grow its share of the global total, which is a trend we expect to continue into 2024. The region's large consumer base, comparative economic strength, and relative geopolitical stability have fostered favourable conditions towards this greater concentration."

Additional key findings of the Preqin Alternatives in North America 2024 report include:

Dry powder continues to climb in world's largest VC market: A rapid runup in fundraising led to expanded dry powder ledgers in the first half of 2023. By the end of June 2023, dry powder accounted for over 28% of North America-based VC AUM, or $327.2bn - a ten year high. In absolute terms, the $327.2bn in dry powder was the highest on record.

Performance of most recent vintages - highs: Natural resource funds, particularly energy-focused funds, have performed best in the most recent vintages of 2020 and 2021. The median internal rates of return (IRR) were 21.5% and 15.4%, respectively.

Performance of most recent vintages - lows: VC funds, on the other end of the spectrum, were markedly lower in the most recent vintages than they had been in earlier iterations. The median IRR for vintage 2021 VC funds was 1.3%, reaching new lows previously set by 2020 vintages (12.5%) and the 19.2% average from vintage 2014 to 2019 funds.