Some private fund managers in alternatives may recall when a sound investment strategy, an established track record and a few key relationships with the right investors were enough to get fundraising. That's not to say raising assets was easy, or investor due diligence was less rigorous, but the industry was simply not as mature in its early days. During the past decade, as the industry has grown and become more institutionalized, the standards and practices of investors in alternatives have evolved.
According to a recent report by McKinsey & Company, "Money has continued to pour into alternatives over the past three years, with assets hitting a record high of $7.2 trillion in 2013. The category has now doubled in size since 2005, with global AUM growing at an annualized pace of 10.7% - twice the growth rate of traditional investments." The same study notes this trend is not a short-term phenomenon and represents a significant growth opportunity for asset managers.