The unstoppable rise of alternatives

Total global alternative assets under management swells to almost $6.5 trillion

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| Source: Willis Towers Watson Public Limited Company
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Overall survey statistics

Overall survey statistics

*Figures for some of these managers were obtained from publicly available sources and using data derived from the Global Billion Dollar Club, published by Hedge Fund Intelligence.

Willis Towers Watson Public Limited Company

ARLINGTON, Va., July 17, 2017 (GLOBE NEWSWIRE) -- The world’s largest 100 alternative asset managers saw assets under management increase by 10% in 2016, rising to $4 trillion, according to the 2017 edition of Willis Towers Watson’s (NASDAQ:WLTW) Global Alternatives Survey. The survey, which captures long-term institutional investment trends by seven main investor groups across 10 alternative asset classes, showed that of the top 100 alternative investment managers, real estate managers have the largest share of assets (35% and over $1.4 trillion), followed by private equity fund managers (18% and $695 billion), hedge funds (17% and $675 billion), private equity funds of funds (12% and $492 billion), illiquid credit (9% and $360 billion), funds of hedge funds (6% and $228 billion), infrastructure (4% and $161 billion) and commodities (1%).

In terms of the growth in asset classes among the top 100 asset managers, illiquid credit saw the largest percentage increase over the 12-month period, with assets under management rising from $178 billion to $360 billion. Conversely, assets allocated to direct hedge fund strategies among the top 100 asset managers fell over the period, from $755 billion to $675 billion.

“As capital supply and competition have increased in some segments of the illiquid credit universe, yields are not always offering sufficient compensation for illiquidity and risk,” said Brad Morrow, head of manager research, North America, Willis Towers Watson. “At the same time, we have seen some withdrawal of capital from hedge funds in the face of high fees, skewed alignment of interests and performance headwinds. It appears the growing groundswell of negative sentiment that has arisen due to the aforementioned issues is now showing up in the decisions of asset allocators. We have been surprised it has taken this long to observe the trend turn; however, this is aligned with our long-held view that the hedge fund industry needs to change, with those willing to offer greater transparency and display value for money likely to prosper going forward.”

Data for the total alternative investment universe show that overall alternative assets under management now stand at just under $6.5 trillion, across 562 entries. North America continues to be the largest destination for alternative asset manager allocations (54%). Overall, 33% of alternative assets are invested in Europe and 8% in Asia Pacific, with 6% invested in the rest of the world.

The research also highlights that when looking at the distribution of assets within the top 100 alternative asset managers by investor type, pension fund assets represent a third (33%) of assets, followed by wealth managers (15%), sovereign wealth funds (5%), endowments and foundations (2%), banks (2%) and funds of funds (2%). Notably, insurance companies’ proportion among the top 100 alternative asset managers grew from 10% to 12% of total manager assets.

“Although the alternative asset manager universe continues to be dominated by pension fund assets, as solutions have continued to evolve that are better aligned to investor needs and incorporate lower cost structures, we have seen growing interest from other investor groups, such as insurers looking to lock in alpha opportunities presented by continued volatility,” said Morrow.

Pension fund assets managed by the top 100 alternative asset managers now stand at $1.6 trillion, up 9% compared to last year’s study, and represent 51% of their total assets under management. Real estate managers continue to have the largest share of pension fund assets with 41%, followed by private equity funds of funds (18%), hedge funds (12%), infrastructure (8%), illiquid credit (8%), private equity (7%) and funds of hedge funds (5%).

According to the latest data in the research, Bridgewater Associates is the largest manager in terms of overall assets under management, with over $116 billion invested in direct hedge funds. TH Real Estate — an affiliate of Nuveen, the investment management arm of TIAA — is the largest real estate manager globally, overseeing more than $105 billion in assets, while Blackstone continues to look after the highest volume of private equity and fund of hedge funds assets at just over $100 billion and $71 billion respectively. Prudential Private Placement Investors is the most significant illiquid credit manager with nearly $81 billion under management.

The top 25 ranking of alternative asset managers

RankName of parent organizationCountryAUM (USD millions)Asset class
1Bridgewater AssociatesUnited States$116,764.20Direct hedge funds
2TH Real Estate (1)United States$105,488.98Real estate strategies
3BlackstoneUnited States$101,963.00Real estate strategies
4BlackstoneUnited States$100,192.00Direct private equity
5Macquarie GroupAustralia$96,161.72Direct infrastructure funds
6PGIM (2)United States$94,583.99Real estate strategies
7Prudential Private Placement InvestorsUnited States$80,860.40Illiquid credit
8CBRE Global InvestorsUnited States$78,200.00Real estate strategies
9UBS Asset ManagementSwitzerland$78,031.00Real estate strategies
10TPG Capital**United States$72,000.00Direct private equity funds
11BlackstoneUnited States$71,119.70Funds of hedge funds
12AQR Capital ManagementUnited States$69,175.00Direct hedge funds
13J.P. Morgan Asset ManagementUnited States$61,346.40Real estate strategies
14Principal Global InvestorsUnited States$60,640.00Real estate strategies
15Kohlberg Kravis Roberts & Co.United States$58,398.80Direct private equity funds
16AXA Investment ManagersFrance$56,506.60Real estate strategies
17Man GroupUnited Kingdom$54,668.00Direct hedge funds
18Brookfield Asset ManagementCanada$54,642.00Real estate strategies
19HinesUnited States$54,004.00Real estate strategies
20LaSalle Investment ManagementUnited States$53,160.00Real estate strategies
21Goldman Sachs Asset ManagementUnited States$52,183.34Private equity fund of funds
22AEW (3)United States$50,996.00Real estate strategies
23The Carlyle Group**United States$50,864.00Direct private equity funds
24Providence Equity Partners**United States$50,000.00Direct private equity funds
25Advent InternationalUnited Kingdom$48,932.00Direct private equity funds
*Data is derived from the Global Billion Dollar Club, published by Hedge Fund Intelligence.
**Figures show total assets under management, obtained from publicly available sources.
(1) TH Real Estate is an affiliate of Nuveen (the investment management arm of TIAA).
(2) The assets reported here reflect those of the PGIM Real Estate and PGIM Real Estate Finance divisions.
(3) AEW Capital Management is an affiliated investment management firm of Natixis Global Asset Management, thus contributing to the illustration of Natixis' overall capabilities in global alternative offerings.
 

A chart accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/fbb639ab-2c56-4ebb-9b81-56fa6c818ab1

Notes to editors

Willis Towers Watson conducted this survey for the year to December 2016 to rank the largest alternative investment managers. The survey includes 562 investment manager entries comprising hedge funds (121), real estate (102), private equity (75), illiquid credit (60), infrastructure (58), private equity fund of funds (46), fund of hedge funds (39), commodities (23), natural resources (22) and insurance-linked investments (16). For real estate, commodities and infrastructure, individual managers are included. A 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 Hedge Fund Intelligence. All figures are in U.S. dollars.

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 colleagues worldwide, assets under advisory of over $2.3 trillion and over $87 billion of assets under management.

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 40,000 employees serving more than 140 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.

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eemerman@eaglepr.com