Towers Watson survey shows total global alternative assets
under management hit $5.7 trillion
Total assets managed by the top 100 alternative investment
managers globally reached $3.3 trillion in 2013 ($3.1 trillion in
2012), according to research produced by global professional
services company Towers Watson (NYSE, NASDAQ: TW), in conjunction
with the Financial Times. The Global Alternatives Survey, which
covers seven asset classes and seven investor types, shows that of
the top 100 alternative investment managers, real estate managers
have the largest share of assets (31% and over $1 trillion),
followed by private equity fund managers (23% and $753 billion),
hedge funds (22% and $724 billion), private equity funds of funds
(PEFoFs) (10% and $322 billion), funds of hedge funds (FoHFs) (5%
and $173 billion), infrastructure (4%) and commodities (2%).
The research, which this year itemizes real assets* and illiquid
credit for the first time, also includes the top-ranked managers,
by assets under management (AuM), in each area. Data from the
broader survey show that total global alternative AuM is now $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. 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,” said Brad Morrow, head of manager
research, Americas. “So it is 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.”
The research — which includes data on a diverse range of
institutional investor types — shows that pension fund assets
represent a 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, for example, in real assets and illiquid credit.
But they are by no means the only type of institutional investor
looking for capacity with the top alternative managers. Demand from
insurers, endowments and foundations, and sovereign wealth funds is
on the rise and only going to increase in the future as competition
for returns remains fierce,” said Morrow.
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 (with more
capital invested in Europe). Overall, 38% of alternative assets are
invested in Europe, 7% in Asia Pacific and 10% invested in the rest
of the world.
In the ranking of top 100 asset managers by pension fund assets,
these increased by nearly 2% from the year before to reach nearly
$1.4 trillion. Real estate managers continue to have the largest
share of pension fund assets, with 35%, followed by PEFoFs (20%),
private equity (15%), hedge funds (12%), infrastructure (8%), FoHFs
(7%), illiquid credit (2%) and commodities (1%).
“Pension funds globally continue to put their faith in diversity
via increasing alternative assets to help deliver more reliable
risk-adjusted returns at the total fund level. This is evidenced by
the growth, significant in some instances, in all but one of the
asset classes in the past five years. Most of the traditional
alternative asset classes are no longer really viewed as
alternatives, but just different ways of accessing long-term
investment themes and risk premiums. As such, allocations to
alternatives will almost certainly continue to increase in the long
term but are more likely to be implemented directly via specialist
managers rather than funds of funds, although funds of funds will
also continue to attract assets, as borne out by this research,”
said Morrow.
Data from the wider survey show that at the end of 2013, the top
25 alternative asset managers of wealth management assets managed
$426 billion (similar to 2012), followed by the top 25 managers of
insurance company assets ($275 billion, up by 13%), the top 25
managers of sovereign wealth fund assets ($153 billion, roughly the
same), the top 25 managers of bank assets ($124 billion, down by
23%), the top 25 managers of fund-of-fund assets ($100 billion,
down by 16%), and the top 25 managers of endowment and foundation
assets ($83 billion, up by 15%).
“Throughout the crisis, investors continued to move away from
simply holding equities as their main growth asset and to make
greater use of alternative assets. We expect this to continue in
the future. We think the effort to diversify in this way is
worthwhile, but investors need to be cautious about choosing the
best and most efficient vehicles, not forgetting the increasing
number of cheaper and lower governance routes for improving
investment efficiency, such as using smart beta, notably in the
alternatives space,” said Morrow.
According to the research, Macquarie Group is the largest
infrastructure manager, with $96 billion, and tops the overall
rankings, while Blackstone ($70 billion) is the largest real estate
manager. The Goldman Sachs Group is the largest private equity
manager in the ranking, with $60 billion, and Carlyle Solutions
Group is the top PEFoF manager, with $48 billion. Blackstone is the
largest FoHF manager, with $54 billion, while Bridgewater
Associates is the largest hedge fund manager, with $87 billion.
BlackRock is the largest commodities manager, with $53 billion;
M&G Investments is the largest illiquid credit manager ($31
billion), and the largest manager of real assets is EII Capital
Management, with $11 billion.
* Real assets strategies include a wide range of investment
opportunities i.e. in agriculture, farmland, timberland, water
(including water rights), natural resources, etc. The distinctive
characteristic of real assets is tangible underlying assets and
their connection to the food and resource-scarcity theme.
The top 25 ranking
Position
Name of parent organization
Main placeof domicile
Total AuM(US$ millions)
Asset class
1
Macquarie Group
Australia
96,347.90 Direct infrastructure funds
2 Bridgewater Associates United States 87,108.00 Direct
hedge funds
3 Blackstone United States 70,405.29 Direct real
estate funds
4 UBS Global Asset Management Switzerland
64,096.40 Direct real estate funds
5 AXA Real Estate France
60,936.19 Direct real estate funds
6 The Goldman Sachs Group
United States 60,206.00 Direct private equity funds
7 TPG
Capital*** United States 59,000.00 Direct private equity funds
8 J.P. Morgan Asset Management* United States 59,000.00
Direct hedge funds
9 Kohlberg Kravis Roberts & Co.
United States 54,845.00 Direct private equity funds
10
Blackstone United States 54,292.90 FoHFs
11 CBRE Global
Investors United States 53,700.00 Direct real estate funds
12 BlackRock United States 53,431.30 Direct commodities
funds
13 Apollo Global Management United States 49,000.00
Direct private equity funds
14 LaSalle Investment Management
United States 47,989.00 Direct real estate funds
15 Carlyle
Solutions Group United States 47,759.90 PEFoF
16 CVC Capital
Partners Luxembourg 42,478.30 Direct private equity funds
17
Blackstone United States 42,400.97 Direct private equity funds
18 The Goldman Sachs Group United States 42,223.50 PEFoF
19 J.P. Morgan Asset Management United States 41,615.70
Direct real estate funds
20 Credit Suisse Asset Management
United States 41,178.10 Direct real estate funds
21 Och-Ziff
Capital Management Group United States 40,600.00 Direct hedge funds
22 Principal Global Investors United States 40,264.70 Direct
real estate funds
23 Deutsche Asset & Wealth Management
Germany 40,134.20 Direct real estate funds
24 Apax
Partners** United Kingdom 40,000.00 Direct private equity funds
25 Providence Equity Partners***
United States 40,000.00 Direct private
equity funds * Data derived from the Global Billion Dollar Club,
published by HedgeFund Intelligence. ** Figures show total capital
raised since inception, obtained from publicly available sources.
*** Figures show total assets under management, obtained from
publicly available sources.
Overall Survey Statistics
Managertype
Investortype
FoHFs*
Hedgefunds*
PEFoFs*
Privateequityfunds*
Realestatefunds
Commoditiesfunds
Infrastructurefunds
Realassets
Illiquidcredit
Total
US$ billion
Top 100 totalassets
172.5 723.9 321.6 752.6 1,020.6 78.6 120.6 — 77.7
3,268.2
Top 100pension fundassets
94.1 162.8 264.8 199.0 478.4 16.6 108.5 6.7 25.4
1,356.3
Top 25insurancecompanyassets
16.7 11.9 32.2 5.4 172.0 — 6.1 — 30.7
274.9
Top 25sovereignwealth fundassets
17.3 23.9 7.9 37.1 51.6 — 11.0 — 4.3
153.1
Top 25endowmentandfoundationassets
8.7 17.5 5.0 20.6 16.7 4.0 — 5.4 4.9
82.8
Top 25 fundof fundassets
— 40.6 — 49.9 — 3.5 5.6 — —
99.5
Top 25wealthmanagerassets
39.0 65.4 — 43.4 191.0 59.9 26.9 — —
425.6
Top 25 bankassets
25.7 23.2 4.6
12.4 34.9 2.5 6.1
3.6 11.2
124.2
*Figures for some of these managers were obtained from publicly
available sources and using data derived from the Global Billion
Dollar Club, published by HedgeFund Intelligence.
About the Survey
This survey was conducted by Towers Watson for the year to
December 2013 to rank the largest alternative investment managers
and includes 589 investment manager entries comprising 85 in real
estate, 66 in FoHFs, 55 in PEFoFs, 162 in hedge funds, 90 in
private equity, 55 in infrastructure, 32 in commodities, 24 in
illiquid credit and 20 in real assets. For real estate, commodities
and infrastructure, individual managers are included. The majority
of the data (531 entries) comes directly from investment managers,
with the remainder coming from publicly available sources. Certain
individual hedge fund information was sourced from the Global
Billion Dollar Club, published by HedgeFund Intelligence. All
figures are in U.S. dollars.
Towers Watson Investment
Towers Watson’s Investment business is focused on creating
financial value for institutional investors through its expertise
in risk assessment, strategic asset allocation, fiduciary
management and investment manager selection. It has over 800
associates worldwide, assets under advisory of over $2 trillion and
over $60 billion of AuM.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global
professional services company that helps organizations improve
performance through effective people, risk and financial
management. The company offers consulting, technology and solutions
in the areas of benefits, talent management, rewards, and risk and
capital management. Towers Watson has more than 14,000 associates
around the world and is located on the web at towerswatson.com.
Towers WatsonBinoli Savani, +1
703-258-7648binoli.savani@towerswatson.comorEd Emerman, +1
609-275-5162eemerman@eaglepr.com
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