The value of assets held by hedge fund, private equity and real estate fund managers reached $6 trillion (£3.6 trillion) last year as investors regained their appetite for risk.
The alternative asset industry grew by $600 billion in 2013 and is expected to accelerate even more over the coming months as it continues to recover from the financial crisis.
Figures from data specialist Preqin revealed that the size of assets controlled by hedge funds grew from $2.3 trillion to $2.66 trillion.
Meanwhile, assets under management at private equity firms - which were able to take advantage of an improved funding environment - climbed from $3.2 trillion to $3.5 trillion.
Mark O’Hare, chief executive at Preqin, said: “In speaking with investors, we have found that many institutions not only have significant allocations to the private equity, hedge fund and real assets sectors, but many are looking to invest even more capital in these asset classes in the near future.”