Total alternative assets managed by the top 100 alternative investment managers reached $3.1 billion last year, according to a Towers Watson/Financial Times survey.
The largest block of alternative assets is in real estate funds (34 percent), followed by 23 percent in private equity funds, 20 percent in direct hedge funds, 10 percent in private equity funds of funds, 6 percent in funds of funds, and 4 percent each in direct commodities and direct infrastructure funds.
Pension funds have long realized the diversification advantages of alternatives, representing 36 percent of the top 100's assets. Wealth managers accounted for 19 percent, while insurance companies represnted 9 percent.
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"For almost all of the past 10 years of this research, we have seen increasing allocations to alternative assets by a wide range of investors," said Zainul Ali, head of manager research, Americas, at Towers Watson Investment Services. "Not only has the appeal of alternative assets broadened to include insurers and sovereign wealth funds, but the range of alternative assets has also increased beyond real estate and private equity to include direct hedge funds, infrastructure and commodities."
He said Towers Watson expects pension funds to continue making larger allocations and to access these assets differently.
"In particular, we expect a continuing shift toward investing via individual managers rather than funds of funds — particularly in hedge funds and private equity — as these managers improve their structures and are seen as a more efficient implementation route than fund-of-funds vehicles," he said.
Australia's Macquaire Group topped the list of alternative asset managers with $95 billion in direct infrastructure funds. The largest manager of direct hedge funds was Bridgewater Associates with $84 billion, and CBRE Global Investors was the largest real estate manager with $80 billion in assets under management.
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