Private equity, real estate and infrastructure managers anticipate stellar asset growth over the next five years, new research from BNY Mellon suggests.

The US custody bank says nearly two-thirds of infrastructure managers, 44% of real estate managers and 39% of private equity managers polled expect their assets under management to grow by at least 50% in the next five years.

“Deep-rooted demographic and macro forces are driving an unprecedented need for investment in real assets such as transport facilities, communications networks, housing and hospitals,” said Alan Flanagan, global head of private equity and real estate fund services at BNY Mellon.

“These demands far outstrip the reach of government and public finances, and this creates huge opportunities for private capital to play a part in people’s everyday lives.”

BNY Mellon and data firm Preqin interviewed 340 fund managers globally as part of a joint study.

The pair found that institutional investors, most notably pension funds and family offices, currently demonstrate the biggest appetite for real investments.

However almost half of the private equity and real estate fund managers surveyed believe that retail investors will account for a higher level of capital inflows by 2020 than they do today.

Investment is set to come from mass affluent and high net worth individuals in developing markets, the continued expansion of sovereign wealth funds and increasing numbers of defined contribution schemes.

“Investors are turning more and more to real assets to find yield, diversify their portfolios, and steer through volatile markets,” added Flanagan.

“The growth in real asset investments has been impressive and there is no sign of it slowing down. As a result, the marketplace has become increasingly competitive on deal sourcing, presenting challenges for managers to successfully deploy the capital they have raised.” 

The majority of alternative investment managers surveyed have seen institutional investor appetite for real assets climb over the last 12 months.

A third of real estate and 41% of infrastructure managers are seeing the most demand coming from public pension funds, followed by private sector pension funds.

Private equity managers see the greatest interest coming from family offices, followed by public pension funds (26% and 25% respectively).