Allocation to alternatives soars

Office buildings1Assets managed by the top 100 alternative investment managers globally exceed $3 trillion (€2.4 trillion), according to research by Towers Watson, with real estate accounting for the largest share. Its latest Global Alternatives Survey shows real estate managers account for 35% of assets, followed by private equity managers with 22% and hedge funds with 21%. Private equity funds of funds account for 9% of global alternatives allocation, funds of hedge funds for 6%, infrastructure for 4% and commodities for 3%. Craig Baker, global head of research at Towers Watson Investment, said the global economic crisis had driven institutional investors towards more diversified investment portfolios. Investment managers who offer significant alternatives capabilities, he added, were the “clear beneficiaries”. Allocations to alternative assets now account for 20% of all pension fund assets globally. Fifteen years ago, this was only 5%. Towers Watson’s research shows that pension fund assets represent one-third of the top 100 alternative managers’ assets. “Pension funds have always been and will remain a very large client group for top alternatives managers,” Baker said. “But the demand from non-pension fund investors, such as sovereign wealth funds, is only going to increase in the future.” ©2012 funds europe

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