It seems counterintuitive that wealth creation is increasingly challenging in a world awash with capital. Traditional investment havens, once teeming with opportunities, now offer diminishing returns, leaving discerning investors yearning for uncharted territories. The S&P 500's subdued performance and the paltry yields of bonds are stark reminders that the old guard is losing its luster.

After peaking in 2021 (US$2.425 billion), private equity activity slowed down in 2022 (US$2.168 billion) and 2023 (US$1.750 billion) [1] due to inflationary headwinds, rising interest rates and finance costs, geopolitical unrest, and an uncertain growth outlook. 

What are the next moves private markets are planning in a slower era? 

The quick answer is to cast the nets wider. The longer answer is to embrace the allure of alternative investments. In this longer-term piece, applicable across the next few quarters, we take a ringside view of the alternative investments landscape, particularly private equity lending, digital assets, and art investments.

Private equity lending: anchoring portfolios in a sea of uncertainty
The private equity market under management totaled US$13.1 trillion in 2023 [2] and has grown nearly 20 percent yearly since 2018. Buyout and venture capital – the two largest PE sub-asset classes - have long been seen as the exclusive playground of institutional giants. Yet, the tide is turning. The rise of private equity lending has democratised this space, extending an invitation to a broader spectrum of investors. It is a strategy that transcends the limitations of traditional banking, offering the promise of attractive interest rates and a comforting degree of stability in an increasingly volatile market.

Despite the current challenges, industry experts convey confidence. Affirming the need for resiliency and adaptability, they posit that while deal volume may have experienced a slight dip, committed sponsors are stepping up to demonstrate a long-term investment. 

This focus on value creation, coupled with the market's historical ability to weather economic, suggests that the industry, slowly but surely, is gravitating towards a data-driven decision-making culture fueled by a relentless pursuit of innovation. Encouraged by emergent technologies, the rise of private equity in 2025 and beyond will reshape the lending landscape’s appetite for flexible financing solutions and precision to navigate the complexities.

Digital assets: charting a course through the cryptocurrency archipelago
Digital assets encompass a wide range of digitally stored items that hold value, from traditional documents and media to cutting-edge cryptocurrencies. The newer digital assets—NFTs, Cryptocurrency, Tokenised and Security Tokens, and CBDCs—represent a vibrant and volatile ecosystem. The DAM or Digital Asset Market, valued at US$8 billion in 2024 and expected to grow to US$11 billion in 2028 [3], embodies the 21st-century gold rush.

It is a decentralised realm where innovation reigns supreme, and the potential for exponential growth is palpable. Yet, this is not a space for the unprepared. 

Navigating this archipelago of cryptocurrencies, NFTs, and smart contracts demands a nuanced understanding of the underlying technology and a keen awareness of the regulatory currents. For one, institutional adoption is on the rise, driven by the promise of increased revenue and operational efficiency. However, regulatory challenges loom large, and the path to mainstream acceptance is fraught with hurdles. 

A KPMG analysis [4] highlights regulatory challenges, cybersecurity concerns, and anti-money laundering regulations and states that the digital asset space is a minefield of compliance requirements. The future looks bright for those who proactively address the complexities and risks, demonstrating a willingness to embrace innovation while maintaining a vigilant approach to risk management. 

This means recognising hurdles and taking proactive steps to de-risk the use cases. For instance, the convergence of blockchain technology and traditional finance is already reshaping the investment landscape, creating a new paradigm of wealth creation.

Art as investment: where beauty and profit converge
With its timeless appeal and intrinsic value, art has transcended its function as a mere aesthetic object. Over the decades, it has emerged as a powerful tool for wealth preservation and growth, offering a tangible connection to prosperity in an increasingly intangible world. Per Deloitte’s 2022 report, wealth linked to art and collectibles for UHNWIs was approximated at US$2.2 trillion and will reach US$3 trillion by 2026 [5].

Investing in art is a long-term game. It requires patience, an eye for beauty, and a willingness to embrace the subjective nature of valuation. Art matures with time like a fine wine; the rewards come to investors who hold and assess it. Consider this example. A 1965 Oil on Canvas by the Indian master S.H. Raza – “Congo” – auctioned in April 2010 for US$272,000 was sold in June 2022 for US$1.5 million. The 6X jump translates to a CAGR of 20.4% over the 12 years.

Additionally, navigating the art market necessitates due diligence and expert advice. From a deep understanding of artistic movements, style eras, historical context, and the ever-shifting tides of taste and preference, the attraction of Art as an investment lies in its potential for financial gain and its ability to enrich the lives of its owners. 

As the saying goes, "Art is not just an investment; it is an experience. " Today, exhibits are headlined by celebrities—Kanye West [6], Eric Schmidt [7], and Leo Di Caprio [8], to name a few. Driven by the glamor blitz, online platforms, and fractional ownership models, the democratising forces are widening investor accessibility.

2024 and beyond. What is next? Embracing the new frontiers of wealth
The world of alternative investments is a vast and dynamic landscape with opportunities for the discerning investor. It is a space where innovation and opportunity intersect, creating a new paradigm of wealth creation. In this context, diversification, the cornerstone of any sound investment strategy, takes on a new meaning. Private equity lending, digital assets, and Art offer a counterpoint to traditional investments, enhancing portfolio resilience and unlocking new avenues for growth.

However, the path to success in alternative investments depends on the latest knowledge and long-standing expertise. Partnering with seasoned wealth managers - 63% report that art is already a part of their offerings [9] - who can help navigate the complexities and inherent risks is vital. 

The future of wealth management lies in embracing the new frontiers. After all, lying behind the proverbial rainbow is the pot of gold that patient and discerning investors can tap and multiply. The journey may be challenging, but the rewards are worth the effort. 

Fortune favors the bold. And in the world of alternative investments, boldness is the key to unlocking a new wealth horizon.