India's Alternative Investment Market is expected to grow five fold from now to reach $2 trillion by 2034, driven by the rising number of high net worth individuals (HNWI) and a growing interest in sophisticated investment strategies, according to an analysis. 

In its latest report, financial services firm Avendus, said that the current market size of alternative investment in India stands at $400 billion. 

It includes SEBI registered Alternative Investment Funds valued at $130 billion, and other funds which account for $270 billion. 
Alternative Investment Funds can be defined as a privately pooled investment vehicle that invests in alternative assets including private equity, venture capital, hedge funds, real estate, and commodities. 

Rising Number of HNWIs

According to the report, the number of high net worth individuals and ultra high net worth individuals are expected to double in the next five years, fueled by favorable regulatory environment and continued support from SEBI. 

The analysis added that a higher internal rate of return (IRR) potential in Indian private markets over private markets in developed regions and proven business models are also inducing a higher rise in the alternative investments' market share. 

Avendus further pointed out that Alternative Investment Funds are apparently showing a more consistent performance compared to other funds, with 75 percent of them generating positive alpha. 

India's HNWI: An Overview

A few months back, a report released by Centrum Institutional Research revealed that the number of Indians earning more than Rs.10 Crore annually increased by 63 percent over the past five years to reach 31,800.

The analysis added that 58,200 individuals in India are earning more than Rs.5 Crore annually, representing a 49 percent surge in the last five years. 

The report further pointed out that India is home to 10 lakh people who earn more than 50 lakhs in a year, also marking a staggering rise of 25 percent in the five-year period.