Pension Funds Largest Group of Alternatives Investors

Total assets managed by the top 100 alternative investment managers globally reached $3.6 trillion, up 3% from the prior year, according to Willis Towers Watson.

The research, which includes data on a diverse range of institutional investor types, shows that pension fund assets represent one-third (34%) of the top 100 alternative managers’ assets, followed by wealth managers (19%), insurance companies (10%), sovereign wealth funds (6%), banks (2%), funds of funds (FoFs) (2%), and endowments and foundations (2%).               

Of the top 100 alternative investment managers, real estate managers have the largest share of assets (34% and more than $1.2 trillion), followed by hedge funds (21% and $755 billion), private equity fund managers (18% and $640 billion), private equity funds of funds (PEFoFs) (12% and $420 billion), funds of hedge funds (FoHFs) (6% and $222 billion), infrastructure (5%) and illiquid credit (5%).

Pension fund assets, managed by the top 100 asset managers of pension funds, increased again from the year before to reach almost $1.5 trillion. Real estate managers continue to have the largest share of pension fund assets with 40%, followed by PEFoFs (20%), hedge funds (10%), private equity (9%), infrastructure (8%), FoHFs (7%) and illiquid credit (4%).

“The alternative asset management industry continues to be remarkably reliant on pension fund money and has earned a position of trust by delivering diversified returns via some of the most highly skilled investment teams around,” says Brad Morrow, head of manager research, North America, Willis Towers Watson. “However, there’s an ever-increasing demand for more alignment and lower cost.”

The research shows, among the top 100 managers, that North America continues to be the preferred destination for investment in alternative assets (50%), with illiquid credit and infrastructure being the only asset classes where more capital is invested in Europe. Overall, 37% of alternative assets are invested in Europe and 8% in Asia Pacific, with 5% throughout the rest of the world.

The research also lists the top-ranked managers in each area by assets under management (AuM). The research report may be downloaded from here.