Private Wealth Investors Drive Alts Investments to $1T Milestone, Set to Double in Five Years
The alternative investment industry is on pace to surpass $1 trillion of cumulative capital formation in the 25 years ending in the fourth quarter of 2025, according to performance analysis from investment banking firm Robert A. Stanger & Company Inc.
Across major categories, it estimated as follows:
- Real estate: $348.1 billion;
- Closed-end funds: $307.5 billion;
- Business development companies: $235 billion; and
- Other strategies: $113.6 billion
“Crossing the trillion-dollar threshold is more than a number – it is a defining moment for alternatives,” said Kevin T. Gannon, chairman and chief executive officer of Stanger. “What was once a niche segment of the market is now a central component of investor portfolios. Real estate remains a cornerstone, but closed-end funds and BDCs are surging, reflecting strong demand for private credit and private equity strategies.”
Previously reported by AltsWire, The Stanger NL BDC Total Return Index – which has measured the quarterly performance of non-listed BDCs since December 2015 – recorded positive total returns in 12 consecutive quarters, and all but one over the past five years.
“Publicly registered, non-traded BDCs continue to dominate alternative investment capital formation, with more than $23 billion raised” said Gannon, as of Q2 2025. “When including private placement BDCs, that figure exceeds $30 billion. Credit remains king, as these funds continue to deliver double-digit distribution rates to investors.”
The pace of growth has been fueled by a combination of investor demand for yield, diversification and access to private markets, according to Stanger. Institutional-quality products that once were limited to pension funds and endowments are now increasingly available through structures designed for individual investors.
The regulatory backdrop for this shift has been particularly favorable as of late. More large asset managers are expanding into private markets and as Jill Calton, executive vice president, executive director of alternative investments at UMB Fund Services, told AltsWire in a recent byline, the president’s August 2025 executive order on democratizing access to alts has the potential to dramatically increase the volume and complexity of alternative assets held by retail investors. The order directs regulatory authorities to develop rules that would open the defined-contribution plan marketplace to private investment firms.
At the same time, product evolution is making alternatives more accessible to regular investors. Features such as regular net asset value reporting, improved liquidity, and access to institutional-quality managers are reshaping the investor experience. As these products gain traction, Stanger leadership said they are driving higher inflows while opening the door for additional product sponsors to meet rising demand.
“Investors are voting with their capital, and the message is clear: alternatives are here to stay. As structures evolve and access broadens, we see this market not just maintaining momentum but accelerating into its next phase of growth.” said Michael S. Covello, executive managing director of Stanger.
In fact, Stanger’s data shows that alternative investment fundraising has increased dramatically in the past five years, with BDCs and closed-end fund structures capturing the fastest growth rates. This acceleration highlights not only the depth of investor demand but also the industry’s ability to innovate and adapt to shifting market conditions.
“The trillion-dollar milestone is not the finish line. It is the starting point for the next era of expansion,” Gannon added. “I expect the next $1 trillion will be raised in alternative investment products over the next five years.”
Robert A. Stanger & Co., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts, and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations, and consolidations.
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