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RIAs opting for PE over hedge funds

Registered investment advisers (RIAs) who run private funds for clients have upped their allocations to private equity investments while cutting their exposure to hedge funds over the last nine years, according to a report by Citywire.

The report’s analysis of SEC Form ADV filings from 2015 through 2023 reveals that RIAs that advise private funds, as well as offering financial planning services, have increased their overall allocations to private markets by more than a third, with specific PE allocations doubling over the same nine-year period.

Private funds allow investors to pool capital in order to invest in specific asset classes, including hedge funds, private equity, private credit, real estate, venture capital or even public equities.

According to Citywire, the number of private funds advised by RIAs has increased by more than 50% from nearly 1,950 to almost 3,240, growing faster than the annualised increase in the number of RIAs. The gross asset value of these private funds has also increased from $147bn to $263bn.

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