Research by Towers Watson revealed that total assets were up $200bn on 2012, with North America continuing to dominate the market, holding over 45% of total alternative capital.
Real estate managers held the largest share of assets at 31%, followed by private equity fund managers with 23% and hedge funds with 22%.
Pension fund assets represented a third of the alternative manager’s assets, followed by wealth managers and insurance companies at 18% and 9% respectively.
The research, which itemises real assets and illiquid credit, also revealed that total global assets under management (AUM) reached £5.7trn, with similar allocations to alternative investments.
Consistent increase
Global chief investment officer at Towers Watson, Craig Baker, said the company had seen increasing allocations to alternative assets for “almost all” of the 11 years it had been conducting the research.
“Not only has the appeal of alternative assets broadened to include many more insurers and sovereign wealth funds, but the range of alternative assets has also increased beyond the likes of hedge funds and infrastructure to include real assets, illiquid credit and commodities,” he said.
“It is therefore not surprising that allocations to alternative assets by pension funds, for example, now account for around 18% of all pension funds’ assets globally, up from 5% 15 years ago.”
Total pension funds’ assets increased by nearly 2% from 2012 to reach $1.4trn, with real estate managers continuing to have the largest share at 35%.
Baker added: “Pension funds globally continue to put their faith in diversity via increasing alternative assets to help deliver more reliable risk-adjusted returns at the total fund level.
“Most of the traditional alternative asset classes are no longer really viewed as alternatives, but just different ways of accessing long-term investment themes and risk premia.”
He said this would lead allocations in alternatives to “almost certainly” increase in the long terms, but via specialist managers rather than fund of funds.
The research also found that Macquarie group was the largest infrastructure manager with $96bn AUM while Blackstone was the largest real estate manager with $70bn AUM.
Towers Watson included 589 investment managers in its survey, with the majority of the data coming directly from investment managers and the remainder coming from publicly available sources.
