Key Takeaways
- • The top 100 alternative investment managers globally managed US$3.1 trillion in assets as of 2012, according to research by Towers Watson published with the Financial Times, representing a significant concentration of capital in the alternative asset class.
- • Real estate dominates the top 100 managers' portfolios with a 34% share (US$1+ trillion), followed by direct private equity at 23% (US$717 billion) and direct hedge funds at 20% (US$612 billion), with smaller allocations to infrastructure, commodities, and funds-of-funds structures.
- • The broader global alternative assets market reached US$5.1 trillion in total AUM, with a different composition than the top 100—real estate declining to 26% and direct hedge funds rising to 26% of total assets, indicating structural differences between leading managers and the broader market.
- • Institutional investor allocations to alternatives have accelerated significantly, with pension fund alternative allocations reaching approximately 19% of total pension assets globally by 2012, up from just 5% fifteen years prior, reflecting broadened appetite beyond traditional real estate and private equity.
- • The alternative investment universe has expanded beyond traditional core assets to include infrastructure, commodities, and hedge fund strategies, attracting new investor types including insurers and sovereign wealth funds seeking diversification and return enhancement.
Summary
The top 100 alternative investment managers globally commanded US$3.1 trillion in assets under management in 2012, according to research conducted by Towers Watson and published in conjunction with the Financial Times. The Global Alternatives Survey, which examined seven asset classes and seven investor types, revealed a market heavily concentrated in real estate, private equity, and hedge fund strategies.
Real estate emerged as the dominant asset class among the leading 100 alternative managers, representing 34% of total assets, or in excess of US$1 trillion. Direct private equity fund managers held the second-largest share at 23% of assets (US$717 billion), while direct hedge funds represented 20% of the portfolio (US$612 billion). The remaining allocations were distributed among private equity funds of funds at 10% (US$315 billion), funds of hedge funds at 6% (US$176 billion), infrastructure at 4% (US$128 billion), and commodities at 4% (US$118 billion).
The broader global alternative assets market demonstrated a different composition, reaching US$5.1 trillion in total AUM. At the market level, real estate's share contracted to 26% while direct hedge funds expanded to 26% of total assets, suggesting that smaller and mid-sized alternative managers maintain higher concentrations in hedge fund strategies relative to the leading 100 firms. This structural divergence indicates varying strategic focuses across the manager spectrum.
Institutional investor participation in alternatives has accelerated materially over the preceding decade. According to Richard Tan, head of Asian private markets at Towers Watson Investment, pension fund allocations to alternative assets had reached approximately 19% of total pension fund assets globally by 2012, compared to just 5% fifteen years earlier. This expansion reflects both increased investor sophistication and the broadening appeal of alternative assets beyond traditional real estate and private equity to encompass direct hedge funds, infrastructure, and commodities. The diversification of alternative asset types and the entry of new investor categories—including insurers and sovereign wealth funds—have positioned alternatives as a core component of institutional investment strategies rather than a peripheral overlay.
Real estate emerged as the dominant asset class among the leading 100 alternative managers, representing 34% of total assets, or in excess of US$1 trillion. Direct private equity fund managers held the second-largest share at 23% of assets (US$717 billion), while direct hedge funds represented 20% of the portfolio (US$612 billion). The remaining allocations were distributed among private equity funds of funds at 10% (US$315 billion), funds of hedge funds at 6% (US$176 billion), infrastructure at 4% (US$128 billion), and commodities at 4% (US$118 billion).
The broader global alternative assets market demonstrated a different composition, reaching US$5.1 trillion in total AUM. At the market level, real estate's share contracted to 26% while direct hedge funds expanded to 26% of total assets, suggesting that smaller and mid-sized alternative managers maintain higher concentrations in hedge fund strategies relative to the leading 100 firms. This structural divergence indicates varying strategic focuses across the manager spectrum.
Institutional investor participation in alternatives has accelerated materially over the preceding decade. According to Richard Tan, head of Asian private markets at Towers Watson Investment, pension fund allocations to alternative assets had reached approximately 19% of total pension fund assets globally by 2012, compared to just 5% fifteen years earlier. This expansion reflects both increased investor sophistication and the broadening appeal of alternative assets beyond traditional real estate and private equity to encompass direct hedge funds, infrastructure, and commodities. The diversification of alternative asset types and the entry of new investor categories—including insurers and sovereign wealth funds—have positioned alternatives as a core component of institutional investment strategies rather than a peripheral overlay.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.