Asset management giants grow alts businesses

The 500 largest fund managers held $2.5trn of alternative AUM at the end of last year, up 5% from 2015, according to the P&I/Willis Towers Watson global 500.

The world’s 500 largest asset managers grew their alternatives assets more than any other class in 2016, according to new research.

The firms held $2.5 trillion of alternatives assets under management at the end of last year, up 5.1 percent from $2.3 trillion in 2015, the P&I/Willis Towers Watson global 500 ranking noted. The growth continues an upward trend in demand for alternatives, with the asset class having risen 26 percent since 2012.

Total assets under management also rose 5.8 percent to $81.2 trillion over the period, recovering from a 1.7 percent fall the previous year. UK-based firms saw AUM drop for the second consecutive year, falling by 4.5 percent to $6.3 trillion.

“Alternatives continue to grow in popularity, with investors remaining under pressure to find effective means of diversification in an environment of lower expected returns from traditional asset classes,” Luba Nikulina, global head of manager research at Willis Towers Watson, said.

“These strategies often come with greater complexity and require superior risk management. We see this as linked to the growth in assets managed by managers in the bottom half of our list, suggesting that investors favour smaller investment houses with specialist investment skills.”

BlackRock topped the list of money managers with $5.1 trillion of AUM as of 31 December, 2016, followed by Vanguard Group and State Street Global with $4 trillion and $2.5 trillion respectively. In fifth place, Germany-based Allianz Group was the largest non-US-domiciled manager, with around $2 trillion of AUM.