Top 100 Alternative Investment Managers Exceed US$3 Trillion Assets Under Management

Towers Watson survey shows total global alternative assets under management near $5 trillion

NEW YORK--(BUSINESS WIRE)--Assets managed by the Top 100 alternative investment managers globally now exceed US$3 trillion, according to research produced by global professional services company Towers Watson (NYSE, NASDAQ: TW) 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%, at $1.1 trillion) followed by private equity managers (22%, at $696 billion), hedge funds (21%, at $643 billion), private equity fund of funds (PEFoF) (9%, at $288 billion), fund of hedge funds (FoHF) (6%, at $187 billion), infrastructure (4%, at $119 billion) and commodities (3%, at $101 billion). 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 $4.9 trillion 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%, and FoHF, which increases to 9% of the total.

Craig Baker, global head of research at Towers Watson Investment, said, “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% of all pension fund assets globally, up from 5% 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.

Craig Baker said, “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%), 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 5% invested in the rest of the world.

During 2011, pension fund assets increased by around 8% from the year before, to $1.0 trillion, 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%, followed by PEFoFs (23%), infrastructure (11%), FoHFs (11%) and commodities (3%). When including pension fund assets managed by individual hedge funds and private equity, the research shows that assets increase to US$1.2 trillion, and the split between asset classes for the Top 100 managers changes to real estate managers (40%) followed by PEFoFs (18%), private equity (14%), hedge funds (10%), infrastructure (9%), FoHFs (8%) and commodities (2%).

Craig Baker said, “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 PEFoFs, FoHFs and real estate managers were $444 billion, $411 billion and $1.2 trillion, respectively. At the same time, total assets for the top 50 private equity managers and hedge funds were $545 billion and $524 billion, respectively, while the top 20 infrastructure and commodities managers manage $221 billion and $179 billion, respectively.

Craig Baker said, “The ongoing economic uncertainty is likely to encourage investors away from simply holding equities as their main growth asset and toward a greater use of alternative assets. We think the effort to diversify in this way is worthwhile, but investors need to be cautious about choosing the best and most efficient vehicles, not forgetting the increasing number of cheaper and lower governance routes for improving investment efficiency, such as using Smart Beta.*”

Christopher DeMeo, Head of Investment, Americas, echoed Baker’s assessment: “Low yields and concerns about public equity volatility continue to drive more institutional investors toward the use of alternatives to access different and potentially more attractive sources of return. We expect this trend to increase across the entire spectrum of investors — pension funds, insurance companies, and endowments and foundations — and we’ve been adding resources as part of our ongoing commitment to help clients efficiently access alternative investments.”

According to the research, CBRE Global Investors is the largest real estate manager, with $94 billion, and tops the overall rankings, displacing last year’s leader, Macquarie Group ($89 billion), which is still the largest infrastructure manager. The Carlyle Group is the largest private equity manager, at $91 billion, with AlpInvest Partners entering the game for the first time as the top PEFoFs, at $41 billion. Blackstone Alternative Asset Management is the largest FoHF, with $39 billion, while Bridgewater Associates is the largest hedge fund, with $76 billion. BlackRock is the largest commodities manager, with $77 billion.

*Smart Beta is about identifying good investment ideas that can be structured better, whether by improving existing beta opportunities, or creating exposures or themes that are implementable in a low-cost, systematic way.

The top 25 ranking
Position	Name of parent organization	Main country of domicile	Total AuM (US$ million)	Asset Class
1	CBRE Global Investors	United States	94,100	Real Estate
2	The Carlyle Group*	United States	90,741	Private Equity
3	Macquarie Group	Australia	88,665	Infrastructure
4	Brookfield Asset Management	Canada	84,346	Real Estate
5	Goldman, Sachs & Co.	United States	78,000	Private Equity
6	BlackRock	United Kingdom	77,335	Commodities
7	Bridgewater Associates	United States	76,100	Hedge Funds
8	UBS Global Asset Management	United Kingdom	59,971	Real Estate
9	RREEF Alternatives	Germany	57,419	Real Estate
10	Morgan Stanley	United States	56,391	Real Estate
11	AXA Real Estate	France	54,541	Real Estate
12	Blackstone Capital Partners	United States	53,243	Private Equity
13	TPG Capital	United States	49,436	Private Equity
14	Invesco	United States	48,333	Real Estate
15	Blackstone Capital Partners**	United States	48,000	Real Estate
16	AEW Capital Management	United States	47,385	Real Estate
17	LaSalle Investment Management	United States	47,360	Real Estate
18	Ares Management	United States	47,000	Hedge Funds
19	J.P. Morgan Asset Management*	United States	45,000	Hedge Funds
20	Oaktree Capital Management	United States	41,834	Private Equity
21	AlpInvest Partners	The Netherlands	40,911	Private Equity FoF
22	Bain Capital	United States	39,364	Private Equity
23	Blackstone Alternative Asset Management	United States	39,042	Fund of Hedge Funds
24	Credit Suisse Asset Management	United States	38,799	Private Equity FoF
25	Principal Global Investors	United States	38,522	Real Estate

*Figures obtained from publicly available sources, and data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence.
** Figure obtained from Blackstone’s website.

Notes to editors

Towers Watson conducted this survey for the year to December 2011 to rank the largest alternative investment managers and includes 493 investment manager entries, comprising 89 in real estate, 69 in fund of hedge funds, 59 in private equity fund of funds, 110 hedge funds, 84 private equity, 53 in infrastructure and 29 in commodities. For real estate, commodities and infrastructure, individual managers are included. The majority of the data (441 entries) 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$.

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