The age of superabundant capital is here



Tackling the problems targeted by the United Nations’ Sustainable Development Goals will require trillions of dollars in new investment every year.

That sounds daunting until you consider new research from Bain & Co.’s Macro Trends Group. Rather than a scarcity of investment funds, researchers found, too much money will be chasing too few good investments for a long time into the future.

Global capital balances more than doubled to more than $600 trillion (9.5 times global GDP) in 2010, from $220 trillion (about 6.5 times global GDP) in 1990. They could surpass a quadrillion dollars by 2025.

In the Harvard Business Review, “Strategy in the Age of Superabundant Capital,” the authors argue this superabundance of capital could last through 2030 and beyond, thanks to a couple of key factors.

First, financial markets are surging in such emerging economies as China and India. These countries will account for more than 40% of the increase in financial assets globally between 2010 and 2020. They will continue fueling capital growth well beyond 2020. And second, more people moving into middle age.

Those between 45 and 59 are past their prime spending years and are making greater contributions to savings and capital formation than any other age group. These “peak savers” will represent a growing percentage of the global population until 2040.

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