Willis Towers Watson Global Alternative Survey 2017
ZURICH, 31 August 2017 – The world's largest 100 alternative asset managers saw assets under management increase by 10% in 2016, rising to USD 4.0 trillion, according to the 2017 edition of Willis Towers Watson's Global Alternatives Survey. This corresponds to annual gth of 10%. In Switzerland too, gth continues in this area with local providers meanwhile managing a total of USD 360 billion, USD 203 billion of which is managed by the Top 5.
The Global Alternative Survey by Willis Towers Watson, which captures long-term institutional investment trends by seven main investor types across ten alternative asset classes, showed that of the top 100 alternative investment managers, real estate managers have the largest share of assets (35%), followed by private equity managers (18%), hedge funds (17%), private equity funds of funds (12%), illiquid credit products (9%), funds of hedge funds (6%), infrastructure (4%) and commodities (1%).
As at the end of 2016, the Top 100 alternative investment managers saw AuM reach USD 4 trillion. The total assets of all managers included in the study rose to almost USD 6.5 trillion.
In Switzerland too, gth in alternative investments continued in 2016. The Top 100 managers - in this study, defined as asset managers associated with a given asset category - include five Swiss companies accounting for 5% of the total alternative assets managed by the Top 100.
As in the rest of the world, real estate represents the most significant "alternative" asset category here in Switzerland, with UBS ranked 9th and Credit Suisse 34th. The other Swiss and Liechtenstein-based companies are UBS funds of hedge funds (48th place), LGT (72th) and Partners Group (100th) both in private equity funds of funds. Compared to the rest of the world though, gth among Swiss managers was much more modest, at 1.6%.
In terms of the gth in asset classes among the top 100 asset managers, illiquid credit saw the largest percentage increase over the 12-month period, with AuM rising from USD 178bn to USD 360bn. Conversely, assets allocated to direct hedge fund strategies among the top 100 asset managers fell over the period, from USD 755bn to USD 675bn (-10.6%).
Luba Nikulina, global head of manager research at Willis Towers Watson, says: “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. At the same time, we have seen some withdrawal of capital from hedge funds in the face of high fees, skewed alignment of interests and performance headwinds. We have been surprised it has taken this long to observe the trend turn, however this is aligned with our long-held view that the hedge fund industry needs to change, with those willing to offer greater transparency and display value for money likely to prosper going forward.”
At the end of 2016, 33% of assets managed by the Top 100 managers came from pension funds (USD 1.3 trillion), 9% more in assets than in the previous year. For this investor group, the allocation to illiquid credit products doubled over the course of 2016 to 8%, whilst managers investing in real estate continued to attract the largest share of money from pension funds at 41%. Private equity funds of funds are next (18%), followed by hedge funds (12%), infrastructure (8%), illiquid credit products (8%), private equity (7%) and funds of hedge funds (5%).
“Despite the elevated levels of macro and political concerns, long lease property strategies in Europe have continued to see interest from de-risking pension funds given the expected return differential relative to bonds and higher inflation expectations. We believe this demand is likely to persist as long as bond yields remain low which makes the ability to source attractive assets in this area ever more important,” says Michael Valentine, Senior Investment Consultant at Willis Towers Watson. “In Private Equity, after a period of strong gth, the search for added value is becoming ever more challenging,” Valentine explains.
According to the Global Alternatives Study, Bridgewater Associates is the world's largest manager with over USD 116 billion invested in direct hedge funds. The only Swiss provider under the Top 25 is UBS which manages USD 78 billion in real estate strategies.
| Rank | Name of parent organisation | Country | AuM US$million | Asset Class |
|---|---|---|---|---|
| 1 | Bridgewater Associates | United States | 116,764.20 | Direct Hedge Funds |
| 2 | TH Real Estate (1) | United States | 105,488.98 | Real Estate Strategies |
| 3 | Blackstone | United States | 101,963.00 | Real Estate Strategies |
| 4 | Blackstone | United States | 100,192.00 | Direct Private Equity |
| 5 | Macquarie Group | Australia | 96,161.72 | Direct Infrastructure Funds |
| 6 | PGIM (2) | United States | 94,583.99 | Real Estate Strategies |
| 7 | Prudential Private Placement Investors | United States | 80,860.40 | Illiquid Credit |
| 8 | CBRE Global Investors | United States | 78,200.00 | Real Estate Strategies |
| 9 | UBS Asset Management | Switzerland | 78,031.00 | Real Estate Strategies |
| 10 | TPG Capital** | United States | 72,000.00 | Direct Private Equity Funds |
| 11 | Blackstone | United States | 71,119.70 | Funds of Hedge Funds |
| 12 | AQR Capital Management | United States | 69,175.00 | Direct Hedge Funds |
| 13 | J.P. Morgan Asset Management | United States | 61,346.40 | Real Estate Strategies |
| 14 | Principal Global Investors | United States | 60,640.00 | Real Estate Strategies |
| 15 | Kohlberg Kravis Roberts & Co. | United States | 58,398.80 | Direct Private Equity Funds |
| 16 | AXA Investment Managers | France | 56,506.60 | Real Estate Strategies |
| 17 | Man Group | United Kingdom | 54,668.00 | Direct Hedge Funds |
| 18 | Brookfield Asset Management | Canada | 54,642.00 | Real Estate Strategies |
| 19 | Hines | United States | 54,004.00 | Real Estate Strategies |
| 20 | LaSalle Investment Management | United States | 53,160.00 | Real Estate Strategies |
| 21 | Goldman Sachs Asset Management | United States | 52,183.34 | Private Equity FoF |
| 22 | AEW (3) | United States | 50,996.00 | Real Estate Strategies |
| 23 | The Carlyle Group** | United States | 50,864.00 | Direct Private Equity Funds |
| 24 | Providence Equity Partners** | United States | 50,000.00 | Direct Private Equity Funds |
| 25 | Advent International | United Kingdom | 48,932.00 | Direct Private Equity Funds |
* Data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence
**Figures show total assets under management, obtained from publicly available sources
(1) TH Real Estate is an affiliate of Nuveen (the investment management arm of TIAA)
(2) The assets reported here reflect those of the PGIM Real Estate and PGIM Real Estate Finance divisions
(3) AEW Capital Management is an affiliated investment management firm of Natixis Global Asset Management, thus contributing to the illustration of Natixis' overall capabilities in global alternative offerings
* Figures for some of these managers were obtained from publicly available sources and using data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence
Willis Towers Watson conducted the Global Alternative Survey for the year to December 2016 to rank the largest alternative investment managers and includes 562 investment manager entries comprising: 121 in hedge funds, 102 in real estate, 75 in private equity, 60 in illiquid credit, 58 in infrastructure, 46 in private equity fund of funds, 39 in fund of hedge funds, 23 in commodities, 22 in natural resources and 16 in insurance-linked investments. For real estate, commodities and infrastructure, individual managers are included. The majority of the data comes directly from investment managers with the remainder coming from publicly available sources. Certain individual hedge fund information was sourced from the Global Billion Dollar Club, published by Hedge Fund Intelligence. All figures are in US$.
Since many institutions manage more than one alternative asset category, the Top 100 is comprised of fewer than 100 institutions. The analysis spans all USD 6.5 trillion in assets under management managed by 562 managers.
Willis Towers Watson’s Investment business is focused on creating financial value for institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, assets under advisory of over US$2.3 trillion and over US$87 billion of assets under management.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for gth. With roots dating to 1828, Willis Towers Watson has 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential.
