Press Release

Investors go alternative

Research shows total global alternative assets under management hit $6.2 trillion.

July 11, 2016

LONDON, 11 July 2016 - Total assets managed by the top 100 alternative investment managers globally reached $3.6 trillion up 3% on the prior year, according to research produced by Willis Towers Watson. The Global Alternatives Survey, which covers ten 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 $755bn), private equity fund managers (18% and $640bn), private equity funds of funds (PEFoFs) (12% and $420bn), funds of hedge funds (FoHFs) (6% and $222bn), infrastructure (5%) and illiquid credit (5%).

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

Luba Nikulina, global head of manager research at Willis Towers Watson, said: “Institutional investors continue to focus on diversity but not at all cost. 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 (2%) and endowments & foundations (2%).

Luba Nikulina said: “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 most highly skilled investment teams around. However, in the face of increased scrutiny on the overall value proposition from asset managers to asset owners, there is an ever-increasing demand for more alignment and lower cost. Achieving this would have a positive knock-on effect for managers of 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 largest 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% being invested in the rest of the world.

Pension fund assets, managed by the top 100 asset managers by 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%).

Luba Nikulina said: “There is an increasing profusion of choice for institutional investors wishing to diversify their portfolios. A typical example of this is the increasing number of “alternative beta” strategies - such as reinsurance, carry, value, momentum, merger arbitrage - outside of the traditional hedge fund structure available for significantly lower fees and with much better alignment. There is continued interest and more options available in real estate, infrastructure and other real assets, particularly in secure income strategies where investors are searching for both yield and diversity as an alternative to traditional hedging with government debt securities. Illiquid credit, governance permitting, is another alternative way of diversifying sources of return and improving overall 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 $476bn (up 4%), followed by the top 25 managers of insurance company assets ($304bn – up 1%); the top 25 managers of sovereign wealth fund assets ($173bn – up 8%); the top 25 managers of bank assets ($100bn – down 10%); the top 25 managers of fund of funds assets ($89bn – down 10%); and the top 25 managers of endowment and foundation assets ($87bn – up 8%).

Luba Nikulina said: “The shift away from equities and bonds into alternatives has gained momentum, among most institutional investors around the world, as these strategies have helped to manage risk through diversity. Persistent economic uncertainty coupled with highly volatile conditions is likely to reinforce this trend. What is 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 asset managers will continue to innovate and capture investment opportunities the volatile macro conditions produce and deliver that value to investors.”

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

The top 25 ranking of alternative asset managers

Rank Name of parent organisation Country AuM US$million Asset Class
1 Macquarie Group Australia 95,041.05 Direct Infrastructure Funds
2 Blackstone United States 94,300.00 Direct Private Equity Funds
3 Blackstone United States 93,900.00 Direct Real Estate Funds
4 Bridgewater Associates United States 88,001.10 Direct Hedge Funds
5 CBRE Global Investors United States 79,800.00 Direct Real Estate Funds
6 UBS Asset Management Switzerland 72,953.00 Direct Real Estate Funds
7 TIAA United States 72,043.00 Direct Real Estate Funds
8 TPG Capital** United States 70,000.00 Direct Private Equity Funds
9 Blackstone United States 67,528.06 Funds of Hedge Funds
10 The Carlyle Group** United States 63,144.00 Direct Private Equity Funds
11 J.P. Morgan Asset Management United States 57,130.40 Direct Real Estate Funds
12 Kohlberg Kravis Roberts & Co. United States 55,352.39 Direct Private Equity Funds
13 LaSalle Investment Management United States 55,081.00 Direct Real Estate Funds
14 Principal Global Investors United States 53,486.65 Direct Real Estate Funds
15 AXA Investment Managers France 52,846.98 Direct Real Estate Funds
16 Man Group United Kingdom 51,419.00 Direct Hedge Funds
17 AQR Capital Management United States 50,996.06 Direct Hedge Funds
18 Brookfield Asset Management Canada 49,807.00 Direct Real Estate Funds
19 J. P. Morgan Asset Management* United States 49,200.00 Direct Hedge Funds
20 Hines United States 47,548.47 Direct Real Estate Funds
21 Aviva Investors United Kingdom 45,759.00 Direct Real Estate Funds
22 Deutsche Asset Management Germany 45,381.44 Direct Real Estate Funds
23 Cornerstone Real Estate Advisers United States 45,093.40 Direct Real Estate Funds
24 Providence Equity Partners** United States 45,000.00 Direct Private Equity Funds
25 Och-Ziff Capital Management Group United 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

Overall survey statistics

Global Alternatives Survey 2016 - Press release - Investors go alternative

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

Notes to editors

Willis Towers Watson conducted this survey for the year to December 2015 to rank the largest alternative investment managers and includes 602 investment manager entries comprising: 138 in hedge funds, 92 in real estate, 88 in private equity, 58 in fund of hedge funds, 58 in infrastructure, 54 in private equity fund of funds, 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. All figures are in US$.

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 US$2.3 trillion and around US$75 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 39,000 employees in more than 120 territories. 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.



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