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Top 100 alternative investment managers exceed USD3trn AUM

Date: Wednesday, July 11, 2012
Author: Emily Perryman, HedgeWeek

Assets managed by the top 100 alternative investment managers globally now exceed USD3trn, according to research produced by professional services company Towers Watson in conjunction with the Financial Times.

The Global Alternatives Survey, which for the first time includes individual private equity and hedge funds, shows that of the top 100 alternative investment managers, real estate managers have the largest share of assets (35 per cent, at USD1.1trn) followed by private equity managers (22 per cent, at USD696bn), hedge funds (21 per cent, at USD643bn), private equity fund of funds (nine per cent, at USD288bn), fund of hedge funds (six per cent, at USD187bn), infrastructure (four per cent, at USD119bn) and commodities (three per cent, at USD101bn).

The research also includes the top-ranked managers, by assets under management, in each area.

Data from the broader survey show that total global alternative assets under management are now at USD4.9trn and are split between the asset classes in similar proportions to the top 100 alternative investment managers, with the exception of real estate, which falls to 28 per cent, and fund of hedge funds, which increases to nine per cent of the total.

Craig Baker, global head of research at Towers Watson Investment, says: "The ongoing global economic crisis has driven all types of institutional investors toward having more diversified investment portfolios, with investment managers offering significant alternative capabilities being the clear beneficiaries. Notably, allocations to alternative assets now account for 20 per cent of all pension fund assets globally, up from five per cent 15 years ago."

The research, which for the first time includes a diversified range of institutional investors outside pension funds, shows that pension fund assets represent a third of the top 100 alternative managers' assets, followed by insurance companies, sovereign wealth funds, and endowments and foundations.

Baker says: "Pension funds have always been and will remain a very large client group for top alternatives managers, but the demand from non-pension fund investors, such as sovereign wealth funds, is only going to increase in the future."

The research shows that for the top 100 managers, North America continues to be the largest destination for alternative capital (48 per cent), with infrastructure the only exception, with more capital invested in Europe. Overall, one-third of alternative assets are invested in Europe, one-tenth in Asia Pacific, and five per cent invested in the rest of the world.

During 2011, pension fund assets increased by around eight per cent from the year before, to USD1.0trn, and represent over half of all assets managed by the top 100 alternative investment managers.

Real estate managers continue to have the largest share of this, with 52 per cent, followed by private equity fund of funds (23 per cent), infrastructure (11 per cent), fund of hedge funds (11 per cent) and commodities (three per cent). When including pension fund assets managed by individual hedge funds and private equity, the research shows that assets increase to USD1.2trn, and the split between asset classes for the Top 100 managers changes to real estate managers (40 per cent) followed by private equity fund of funds (18 per cent), private equity (14 per cent), hedge funds (10 per cent), infrastructure (nine per cent), fund of hedge funds (eight per cent) and commodities (two per cent).

Baker says: "The trend toward larger allocations to alternatives by pension funds is likely to continue, but the way investors access them is already changing. While pension funds currently have more exposure to funds of funds than any other investor group, this exposure is declining as individual managers -- particularly hedge funds and private equity -- improve their structures and are seen as a more efficient implementation route than funds of funds vehicles."

Data from the wider survey show that at the end of 2011, total assets managed by top 50 private equity fund of funds, fund of hedge funds and real estate managers were USD444bn, USD411bn and USD1.2trn, respectively. At the same time, total assets for the top 50 private equity managers and hedge funds were USD545bn and USD524bn, respectively, while the top 20 infrastructure and commodities managers manage USD221bn and USD179bn, respectively.

According to the research, CBRE Global Investors is the largest real estate manager, with USD94bn, and tops the overall rankings, displacing last year's leader, Macquarie Group (USD89bn), which is still the largest infrastructure manager.

The Carlyle Group is the largest private equity manager, at USD91bn, with AlpInvest Partners entering the game for the first time as the top private equity fund of funds, at USD41bn. Blackstone Alternative Asset Management is the largest fund of hedge funds, with USD39bn, while Bridgewater Associates is the largest hedge fund, with USD76bn. BlackRock is the largest commodities manager, with USD77bn.