Total assets managed by the top 100 alternative investment managers globally reached US$3.3 trillion ($3.54 trillion) last year, up from US$3.1 trillion in 2012.
The Global Alternatives Survey, produced by Towers Watson and published in conjunction with the Financial Times, shows that of the top 100 alternative investment managers, real estate managers have the largest share of assets (31%), followed by private equity fund managers (23%), hedge funds (22%), private equity funds of funds (10%), funds of hedge funds (5%), infrastructure (4%) and commodities (2%).
Data from the broader survey show that total global alternative assets under management is now US$5.7 trillion and is split between the asset classes in broadly similar proportions to the top 100 alternative investment managers, with the exception of real estate, which falls to 24% and hedge funds, which increases to 27% of the total.
For almost all of the past 11 years of this research, we have seen increasing allocations to alternative assets by a wide range of investors, says Craig Baker, global chief investment officer at Towers Watson.
“Not only has the appeal of alternative assets broadened to include many more insurers and sovereign wealth funds, but the range of alternative assets has also increased beyond the likes of hedge funds and infrastructure to include real assets, illiquid credit and commodities. It is therefore not surprising that allocations to alternative assets by pension funds, for example, now account for around 18% of all pension fund assets globally, up from 5% 15 years ago,” he adds.
The research shows that pension fund assets represent one-third (33%) of the top 100 alternative managers’ assets, followed by wealth managers (18%), insurance companies (9%), sovereign wealth funds (6%), banks (3%), funds of funds (3%) and endowments and foundations (3%).
Pension funds continue to search for new investment opportunities, and alternative assets have been an area where they have made, and continue to make, very significant allocations. While remaining an important investor for traditional alternative managers, pension funds are also at the forefront of investing in new alternatives.
“But they are by no means the only type of institutional investor looking for capacity with the top alternative managers,” Baker explains. “Demand from insurers, endowments and foundations, and sovereign wealth funds is on the up and only going to increase in the future as competition for returns remains fierce.”
The research shows that, for the top 100 managers, North America continues to be the largest destination for alternative capital (45%), with infrastructure as the only major exception where more capital is invested in Europe. Overall, 38% of alternative assets are invested in Europe and 7% in Asia Pacific, with 10% being invested in the rest of the world.
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