In 2020, investments in alternative investments made by the AFOREs continued with their dynamism from previous years, with more attention going towards global allocations rather than local ones. While in 2020 investments in local private equity through the CKDs meant total commitments of 1.1 billion dollars; Global investments through CERPIs were practically double, reaching 2.1 billion dollars. In 2020, 5 CKDs and 17 CERPIs were issued.
Through 49 CERPIS the AFOREs ended 2020 with 9.7 billion dollars of committed capital, where only 25% have been called. In 2018, the year in which global alternative investments were authorized for the AFOREs, the committed capital reached almost five billion dollars; a year later (2019) another 2.4 billion dollars were added and in 2020 another 2.1 billion dollars were added, managing to maintain commitments above 2 billion dollars in the last two years.
The capital called barely reaches 2.4 billion dollars at the end of 2020 and its evolution has been gradual in recent years. In 2018 they were called 1.4 billion dollars; In 2019, 668 million dollars were added and in 2020 another 302 million dollars, so there would be still to call 7.3 billion dollars to channel them to global private equity projects.
These investments have been directed to the fund-of-funds sector, which represents 80% of the resources raised, followed by the private equity sector with 11% and the infrastructure sector with 7%. It is highly likely that the fund of funds sector has a diversity of sectors and projects, as this information is not public.
The assets under management of the AFOREs ended the year at 237 billion dollars, of which 5.7% are alternative investments, both local and global. Global investments barely mean 1% at market value or 4% if the committed resources are considered.
The assets under management of the AFOREs increased 12% in dollars in 2020, going from 211.8 to 237.2 billion dollars, which means 20.4% of GDP. It is interesting to observe that while in 2019 the local and global alternative investments of the AFOREs were 6.1%, a year later they had a slight decrease to end at 5.7%. Although there was a small decline from one year to the next, the growth in assets under management caused the percentage to drop and this is precisely what will give these investments greater dynamism by seeking competitive risk-adjusted options.
Preqin, the leading global private equity fund analyst, estimates the alternative asset industry will continue to grow and reach more than 17 trillion by 2025, which means registering a compound annual growth rate of 9.8% (CAGR rate) and a general increase of 60%.
Preqin believes that the private equity and private debt sectors will be responsible for driving the growth of alternative assets over the next five years, registering an increase in their assets under management of 16% and 11% annually. In fact, he points out that private equity will end up representing 53% of the alternative investment industry by 2025.
For 2021, AFOREs could be expected to maintain the dynamism of global investments at 2 billion dollars as seen in recent years.
Column by Arturo Hanono