Alternative Investing Report - September 20, 2024

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The global market for alternative assets is projected to grow to more than $30 trillion by 2030, up from $16.8 trillion at the end of 2023, according to Preqin. That represents an annualized growth rate of 9.7% over the next six years. Secondaries are poised to see the highest growth rate, at 13.1% annually, while private equity, private credit, and real estate are also grow substantially the rest of the decade.

➨ TAKEAWAY: We are still in the midst of the alternative growth cycle, as more investors are diversifying their portfolios into private market assets. Asset managers are opening up access to these asset classes to wealthy investors, trying to meet the increased demand. By the end of the decade, it will be even more common for everyday investors to be invested into alts, and demand is only going to continue growing.

Now that the Federal Reserve cut rates by half a point on Wednesday, there is renewed optimism that the dormant M&A market will spring back to life. The first half of the year saw just $1.47 trillion in dealmaking volume, down 41% from the two-quarter peak in Q4 2021 and Q1 2022. The lack of activity has forced some VCs to sell at lower valuations just to be able to return funds to investors, causing a buyer’s market.

➨ TAKEAWAY: Looking across the ocean at Europe, M&A deal value rose by 17% last quarter following interest rate cuts by the European Central Bank, Switzerland’s national bank, and Sweden’s national bank. Given that the Fed is anticipated to make further rate cuts this year, it will not be surprising if we see more buyouts the rest of the year. While the glory days of zero-interest rates are not coming back anytime soon, this is a step in the right direction.

In our latest episode of Smart Humans, Slava Rubin talks with EquityZen CEO and Co-Founder Atish Davda about pre-IPO venture investing and the latest trends in the asset class.

🏡 Mortgage rates fall: The 30-year fixed mortgage rate hit 6.1% and is now at a two-year low, and should fall further in response to Wednesday’s rate cut, so expect the housing market to get a boost the rest of the year.

🪙 Crypto prices up: The crypto market’s initial reaction to the rate cut was positive, with Bitcoin (+4.3%), Ethereum (+5.8%) and Solana (+7.4%) all up significantly so far.

🎨 Magritte coming to auction: The Surrealist’s 1954 painting “L’empire des lumières” is expected to fetch at least $95 million when it hits the block at Christie’s in November.

🤖 Salesforce AI: The software giant is rolling out a new set of AI tools that can handle tasks without human supervision, which will almost certainly lead to job losses, one of the main concerns with the emerging technology.

🏀 LeBron’s HS jersey: The uniform from LeBron’s iconic 2002 Sports Illustrated photo shoot is up for auction next week at Julien’s Hong Kong, with a pre-sale estimate of $1 million - $2 million, after selling last in 2021 for $512,200.

🏢 Amazon return to office: CEO Andy Jassy is ordering his corporate staff back to work in-person, saying that they are now expected to come in to the office five days a week starting at the beginning of 2025. If other companies follow suit, demand for office space could rebound.

Monday: 🏡 Housing market update, 🪙 Ethereum’s struggles
Tuesday: 🪙 Trump’s crypto project, 🏡 Luxury retail booming
Wednesday: 🚀 Insight’s $10B raise, 🧑‍⚖️ SEC Litigation
Thursday: 📊 Fed rate cut, 🪙 Crypto’s response to cut

Have a great weekend!