Alternative capital heads for North America, says Towers Watson

The largest destination for alternative capital is North America, according to a new survey by financial services consultant Towers Watson.

The Global Alternatives Survey 2012, which ranks the top 100 alternative investment managers globally, shows that 48% of alternative capital goes to North America. Infrastructure is the only exception where more capital is invested in Europe.

The Top 100 alternative investment managers globally manage more than $3trn, says the survey, out of an overall figure of $4.9 trn. Overall, one-third of alternative assets are invested in Europe, one-tenth in Asia Pacific, with 5% being investing in the rest of the world.

Of the Top 100 alternative investment managers, real estate managers have the largest share of assets (35% and $1.1 trn) followed by private equity managers (22% and $696bn), hedge funds (21% and $643bn), private equity fund of funds (PEFoF) (9% and $288bn), fund of hedge funds (FoHF) (6% and $187bn), infrastructure (4% and $119bn) and commodities (3% and $101bn).

Data from the wider survey shows that at the end of 2011 total assets managed by top 50 PEFoFs, FoHFs and real estate managers were $444bn, $411bn and $1.2 trn respectively. At the same time, total assets for the top 50 private equity managers and hedge funds were $545bn and $524bn respectively, while the top 20 infrastructure and commodities managers manage $221bn and $179bn respectively. 

Craig Baker, global head of research at Towers Watson Investment (pictured), said: “The on-going global economic crisis has driven all types of institutional investors towards having more diversified investment portfolios, with investment managers offering significant alternatives capabilities being the clear beneficiaries. Notably, allocations to alternative assets now account for 20% of all pension fund assets globally, up from 5% fifteen years ago.”

The research includes for the first time institutional investors other than pension funds. The data shows that pension fund assets represent a third of the Top 100 alternative managers’ assets, followed by insurance companies, sovereign wealth funds, and endowments & foundations. The research also includes the top ranked managers, by assets under management, in each area.

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.”

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