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Investors go alternative

ARLINGTON, Va., July 11, 2016 (GLOBE NEWSWIRE) -- 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 (NASDAQ:WLTW), a leading global advisory, broking and solutions company. The company’s Global Alternatives Survey, which covers 10 asset classes and seven investor types, shows that of the top 100 alternative investment managers, real estate managers have the largest share of assets (34% and over $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%).

The research also lists the top-ranked managers in each area by assets under management (AuM). Data from the broader survey (all 602 entries) show that total global alternative AuM is now $6.2 trillion. For the first time, the level of assets in insurance-linked investments is around $30 billion, of which almost two-thirds is invested in Europe, by 13 asset managers.

“Institutional investors continue to focus on diversity but not cost,” said Brad Morrow, head of manager research, North America, Willis Towers Watson. “While inflows into alternative assets continue apace, investors have become more mindful of alignment of interests and getting value for money. This has contributed to a further blurring between individual asset classes as investors increase their focus on underlying return drivers with the ultimate objective of achieving true diversity and making their portfolios more robust in the face of the increasingly volatile and uncertain macroeconomic environment.”

The research, which includes data on a diverse range of institutional investor types, shows that pension fund assets represent a 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%).

“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,” said Morrow. “However, there’s an ever-increasing demand for more alignment and lower cost. Achieving this would have a positive knock-on effect for managers attracting assets from other investors, such as insurers and sovereign wealth funds, wanting to make the most of market volatility and associated alpha opportunities, particularly given the current lack of clear beta opportunities.”

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.

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%).

“There’s an increasing profusion of choice for institutional investors wishing to diversify their portfolios,” said Morrow. “A typical example of this is the increasing number of alternative beta strategies outside of the traditional hedge fund structure available for significantly lower fees and with much better alignment. There’s also continued interest and more options available in real estate, infrastructure and other real assets. Illiquid credit, governance permitting, is another alternative way of diversifying sources of return and improving portfolio efficiency as part of both low-risk and return-seeking portfolios.”

The survey shows that at the end of 2015, the top 25 alternative asset managers of wealth management assets managed $476 billion (up 4%), followed by the top 25 managers of insurance company assets ($304 billion, up 1%), the top 25 managers of sovereign wealth fund assets ($173 billion, up 8%), the top 25 managers of bank assets ($100 billion, down 10%), the top 25 managers of FoF assets ($89 billion, down 10%), and the top 25 managers of endowment and foundation assets ($87 billion, up 8%).

The top 25 ranking of alternative asset managers

RankName of parent organizationCountryAuM (USD millions)Asset class
1Macquarie GroupAustralia$95,041.05 Direct infrastructure funds
2BlackstoneUnited States$94,300.00 Direct private equity funds
3BlackstoneUnited States$93,900.00 Direct real estate funds
4Bridgewater AssociatesUnited States$88,001.10 Direct hedge funds
5CBRE Global InvestorsUnited States$79,800.00 Direct real estate funds
6UBS Asset ManagementSwitzerland$72,953.00 Direct real estate funds
7TIAAUnited States$72,043.00 Direct real estate funds
8TPG Capital**United States$70,000.00 Direct private equity funds
9BlackstoneUnited States$67,528.06 FoHFs
10The Carlyle Group**United States$63,144.00 Direct private equity funds
11J.P. Morgan Asset ManagementUnited States$57,130.40 Direct real estate funds
12Kohlberg Kravis Roberts & Co.United States$55,352.39 Direct private equity funds
13LaSalle Investment ManagementUnited States$55,081.00 Direct real estate funds
14Principal Global InvestorsUnited States$53,486.65 Direct real estate funds
15AXA Investment ManagersFrance$52,846.98 Direct real estate funds
16Man GroupUnited Kingdom$51,419.00 Direct hedge funds
17AQR Capital ManagementUnited States$50,996.06 Direct hedge funds
18Brookfield Asset ManagementCanada$49,807.00 Direct real estate funds
19J.P. Morgan Asset Management*United States$49,200.00 Direct hedge funds
20HinesUnited States$47,548.47 Direct real estate funds
21Aviva InvestorsUnited Kingdom$45,759.00 Direct real estate funds
22Deutsche Asset ManagementGermany$45,381.44 Direct real estate funds
23Cornerstone Real Estate AdvisersUnited States$45,093.40 Direct real estate funds
24Providence Equity Partners**United States$45,000.00 Direct private equity funds
25Och-Ziff Capital Management GroupUnited States$44,600.00 Direct hedge funds


*Data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence
**Figures show total assets under management, obtained from publicly available sources

“The shift from equities and bonds to alternatives has gained momentum among most institutional investors around the world, as these strategies have helped manage risk through diversity,” said Morrow. “What’s certain is that while the asset management industry as a whole faces some existential questions on whether it has delivered on its promises and how to improve its value proposition in the future, the best managers will continue to innovate, capture opportunities and deliver value to investors.”

According to the research, Macquarie Group is the largest infrastructure manager, with over $95 billion, and tops the overall rankings, while Blackstone is the largest private equity manager, with over $94 billion, and the largest real estate manager, with almost $94 billion. In the ranking, Bridgewater Associates is the largest hedge fund manager, with $88 billion, and Blackstone is the largest FoHF manager, with almost $68 billion. Goldman Sachs is the largest PEFoF manager, with almost $45 billion, and M&G Investments is the largest illiquid credit manager, with over $33 billion. PIMCO is the largest commodities manager, with $10 billion; the largest manager of real assets is TIAA, with over $7 billion, and LGT Capital Partners is the largest manager of insurance-linked investments.

A file archive accompanying this release is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/81d1bf6f-9aee-4d8d-adea-9f1cdf0c3ffe

Notes to editors

Willis Towers Watson conducted this survey for the year to December 2015 to rank the largest alternative investment managers, including 602 investment manager entries comprising 138 in hedge funds, 92 in real estate, 88 in private equity, 58 in FoHFs, 58 in infrastructure, 54 in PEFoFs, 53 in illiquid credit, 26 in commodities, 22 in real assets and 13 in insurance-linked investments. For real estate, commodities and infrastructure, individual managers are included. The majority of the data 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.

About Willis Towers Watson Investment

Willis 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 900 associates worldwide, assets under advisory of over $2.3 trillion and around $75 billion of AuM.

About Willis Towers Watson

Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Media contact Josh Wozman: +1 703 258 5162 josh.wozman@willistowerswatson.com

Source:Willis Towers Watson Public Limited Company