New data from , which tracks such data, has argued. To illustrate the point, over the past 20 years, the number of publicly traded US stocks has shrunk by almost half, to 4,336. That compares with 8,353 unrealised and partially unrealised VC-backed companies in 2019. 

Buoyant mood
Preqin said that almost nine out of 10 investors expect to maintain or increase their allocations in 2020, and almost half of fund managers think the position of the market cycle will have a big impact on private equity in the months ahead.

“Private equity’s enormous expansion seems to be accelerating. The industry is on course to add almost a trillion dollars a year for the next five years, an astonishing rate of growth. Investor demand has been strong and sustained, and fund managers have been able to offer them robust returns even in a low-interest environment, fuelling a virtuous cycle of growth. But it’s not all good news: the fundraising marketplace is more crowded than ever before, making it difficult for fund managers to stand out, and for investors to find the right funds for them,” Christopher Beales, executive editor of the 2020 Preqin Global Private Equity and Venture Capital Report, said. 

Private equity fundraising reached $595 billon with 1,316 funds closed in 2019, a small decline from 2018, when 1,790 funds were closed securing an aggregate $628 billion. In 2019, the average size of venture capital funds rose to $139 million from $127 million in 2018. Buyout funds’ average size also grew to $1.567 billion from $1.012 billion in 2018.

Preqin said that two-thirds (65 per cent) of investors think that equity markets are at a peak, and 33 per cent are increasing their allocations to private capital as a result.

Hedge funds
The report said that investors “remain unsatisfied with performance" and have been withdrawing capital from funds – a net $82 billion in assets were withdrawn in 2019. 

Hedge funds’ fee structures are evolving, and managers are consolidating - average management fees are at their lowest level in 10 years, and in 2019, the number of active funds has declined for the first time to 16,256. 

“2019 hedge fund returns balanced out losses incurred in a tough 2018. But all is not forgiven for the asset class: annualised returns over three and five years trail public indices, and investors remain broadly dissatisfied with the performance of their portfolios,” Preqin’s Beales said.

The Preqin All-Strategies Hedge Fund benchmark returned a net 11.45 per cent in 2019, only the second time in six years that performance has hit double digits. Three-year annualised returns are still at 6.65 per cent, only half as much as the 13.00 per cent gains made by the S&P 500 in the same period.