Pension funds put nearly $1trn into alternatives

Pension_old_woman_410Pension funds continue to diversify their portfolios with nearly $1trn (€700m) allocated to alternatives last year, an increase of 16% compared with 2009, according to research by Towers Watson and the Financial Times.

The survey tracks the world's largest alternatives managers and included 271 investment manager entries last year.

Of the top 100 alternatives managers, real estate was the dominant asset class, accounting for 55% of assets – a three-point increase compared with 2009. Private equity funds of funds and hedge funds of funds each declined slightly to 18% and 12% respectively. Infrastructure investment remained steady at 12% of total assets under management, while commodities rose one point to 3%.

Craig Baker, global head of research at Towers Watson Investment, said: “The case for diversity has been thoroughly tested recently, but those investors that had diversified away from simply holding equities as their main growth asset in the last five years generally performed better than those that hadn’t. Given the ongoing economic uncertainty it is likely diversity will become even more important in the future."

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