Alternatives Holdings by Pensions Pegged at $817B

A news release about the study by Towers Watson and the Financial Times said about half of all assets managed by these alternative investment managers are managed on behalf of pension funds.  

An analysis of the top 100 alternatives managers shows that real estate managers dominate, accounting for about 52% of assets (down from 58% in 2008), followed by private equity fund of funds (PEFoF) at 21% (20% in 2008), fund of hedge funds (FoHF) at 13% (13% in 2008), infrastructure at 12% (9% in 2008), and commodities at 2% (0.5% in 2008).  

Data shows that at the end of 2009, the top 50 real estate managers, FoHFs, and PEFoFs managed $439 billion ($485 billion in 2008), $127 billion ($123 billion in 2008), and $187 billion ($177 billion in 2008), respectively. Infrastructure and commodities remain smaller, but are becoming easier for pension funds to access, with assets of the top 15 commodities managers more than tripling in 2009 compared with 2008.  

“Institutional investors continue to diversify into the full range of alternative assets, encouraged by the way these strategies have performed,” said Carl Hess, global head of Investment at Towers Watson, in the news release. “The trend away from equity-focused portfolios to more diversified structures is now well established as investors acknowledge the risks associated with an undiversified approach, particularly in light of ongoing economic uncertainty.”  

The survey included 224 investment manager entries (up from 206 in 2008) comprising 60 in real estate, 60 in fund of hedge funds, 57 in private equity fund of funds, 22 in commodities, and 25 in infrastructure.  

The survey report is here.