Total global alternative assets under management swells to almost $6.5 trn.
The world’s largest 100 alternative asset managers saw assets under management increase by 10 per cent in 2016, rising to $4trn, according to the 2017 edition of Willis Towers Watson’s Global Alternatives Survey.
The survey, which captures long-term institutional investment trends by seven main investor groups across ten alternative asset classes, showed that of the top 100 alternative investment managers, found illiquid credit saw the largest percentage increase over the 12-month period, with AuM rising from $178bn to $360bn. Conversely, assets allocated to direct hedge fund strategies among the top 100 asset managers fell over the period, from $755bn to $675bn.
Luba Nikulina, global head of manager research at Willis Towers Watson, said: “As capital supply and competition have increased in some segments of the illiquid credit universe, such as direct lending for example, yields are not always offering sufficient compensation for illiquidity and risk.
Data for the total alternative investment universe, shows that overall alternative assets under management now stand at just under $6.5trn, across 562 entries. North America continues to be the largest destination for alternative asset manager allocations (54 per cent). Overall, 33 per cent of alternative assets are invested in Europe and 8 per cent in Asia Pacific, with 6 per cent 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 per cent) of assets. This is followed by wealth managers (15 per cent), sovereign wealth funds (5 per cent), endowments & foundations (2 per cent), banks (2 per cent) and funds of funds (2 per cent). Notably, insurance companies’ proportion among the top 100 alternative asset managers grew from 10 per cent to 12 per cent 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 Luba Nikulina.
Prudential Private Placement Investors is the most significant illiquid credit manager with nearly $81bn under management.