India's Alternative Assets Market Poised to Reach $2 Trillion by 2034: Report

India’s alternative assets market is expected to grow fivefold, reaching $2 trillion by 2034, according to a recent report. This growth highlights the increasing appeal of investment opportunities beyond traditional avenues like stocks, bonds, and cash.

Key Highlights:

• Current Market Status: The market currently holds $400 billion in assets under management (AUM).

• Growth Drivers:

  • Rising investor sophistication.

  • Increased focus on portfolio diversification.

  • Supportive regulatory frameworks.

• High-Net-Worth Individuals (HNIs) Influence:

  • Alternative investments are outperforming traditional options.

  • Growing interest from HNIs and ultra-HNIs reflects global trends, where alternatives doubled their AUM share from 10% to 20% between 2005 and 2020.

  • HNIs allocate 7-8% of their AUM to alternative investments, signaling untapped potential.

• Shift in Investment Landscape:

  • Alternative assets mark a fundamental shift in India’s capital deployment strategy.

  • India is transitioning from a traditional savings-driven market to a more sophisticated and diverse investment landscape.

• Global and Local Synergy:

  • A combination of regulatory enhancements, technological advancements, and investor maturity positions India for rapid growth.

  • India has emerged as a key player in the Asia-Pacific region:

    • India’s share of PE-VC investments in the region grew from 15% in 2018 to 20% in 2023.

• Future Outlook:

  • The wealth of HNIs and ultra-HNIs is projected to double to $2,000 billion by 2027, creating increased demand for alternative funds.

  • Alternative asset firms may see premium valuations as they consolidate and potentially list in Indian markets.

  • The market’s ability to deliver higher long-term returns (alpha) is attracting investors seeking differentiated options.

• Economic Impact:

  • Alternative investments are expected to play a key role in India’s journey toward a $10 trillion GDP.

  • Growth in alternatives signals India's readiness to lead innovation among emerging economies.