Global rise of alternatives

The assets under management (AUM) of the world’s largest 100 alternative asset managers have increased by 10 per cent to US$4 trillion ($5.12 trillion), according to the 2017 edition of Willis Towers Watson’s Global Alternatives Survey.

The survey, that showed long-term institutional investment trends by seven main investor groups, found that out of the top 100 alternative investment managers real estate managers had the largest share of assets (35 per cent and over $1.4 trillion), followed by private equity fund managers (17 per cent and $695 billion), hedge funds (17 per cent and $675 billion), private equity funds of funds (12 per cent and $492 billion), illiquid credit (nine per cent and $360 billion), funds of hedge funds (six per cent and $228 billion), infrastructure (four per cent and $161 billion) and commodities (one per cent).

Illiquid credit was the asset class that saw the largest increase over the 12-month period among the top 100 asset managers, rising from $178 billion to $360 billion while assets allocated to direct hedge fund strategies among the top 100 asset managers fell from $755 billion to $675 billion.

As far as the pension fund assets managed by the top alternative asset managers were concerned, they saw a nine per cent increase, counting year-on-year, and represented 51 per cent of the total AUM ($1.6 trillion).

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Willis Towers Watson’s senior investment consultant, Nick Kelly, said: “Deployment by institutional investors into the infrastructure asset class increased again”.

“We have seen an ongoing trend of capital concentration, with large well-known infrastructure managers raising larger funds than before which has often led to a deterioration in terms and worsening alignment with investors,” he said.

“A growing number of large asset owners in Australia continue to invest directly in infrastructure by forming club deals and JVs which allows them to structure investments in a more cost-efficient way and have more control over their strategy.”