Study: Global alternative AUM reaches $6.3 trillion

Private equity fund managers oversee $767 billion globally, behind real estate and hedge funds

The total amount of alternative investment assets under management globally reached $6.3 trillion (£4.06 trillion; €5.72 trillion) last year, up 10.5 percent from $5.7 trillion the year before, according to Towers Watson & Company's Global Alternative Survey.

The research, which received 623 entries across nine asset classes and seven investor types, found that the top 100 alternative investment managers oversaw $3.5 trillion in assets; more than half of the total globally.

Private equity fund managers came in third with 22 percent of the total, or $767 billion of assets, after real estate and hedge funds, and followed by private equity fund of funds that oversee 10 percent or $342 billion.

TPG Capital, which manages $67 billion in assets, is the largest PE manager, and The Carlyle Group, which manages $64.67 billion, is the largest PE fund of funds manager.

According to Towers Watson's global head of investment manager research Luba Nikulina, the number of managers active in alternatives more than tripled in the past five years and is expected to keep growing.

“This has fostered a highly competitive market and produced many innovative approaches to solving some of the challenges of an enduring low-return environment,” Nikulina said in the statement.

At the same time, there have been criticisms of lack of value-add after fees and not serving the best interests of investors, according to Nikulina. This could affect the endurance of the alternatives industry and bring further regulation, she said, noting “it is up to the industry to address these concerns and together ensure we change investment for the better.”

The study also found pension funds represent a third of the top 100 assets managed, wealth managers 19 percent and insurance companies 8 percent.

Noting that investors are focusing more un underlying return drivers rather than individual asset classes, Nikulina said asset managers “that acknowledge this increasing sophistication of institutional buyers' approach, and change accordingly, will truly flourish.”

North America held its position as the top geographical destination for alternative investments, comprising 47 percent of total global capital. Europe followed at 36 percent and Asia Pacific at 9 percent.

The survey received response from 171 hedge funds, 101 private equity entries and 52 PE fund of funds, among others.

Towers Watson, based in New York, provides human resource consulting and financial and risk management. It manages $5.63 billion in assets, according to PEI's Research & Analytics division. At the time of publication, NASDAQ listed the company's shares at $131.07, giving it a market capitalization of $9.09 billion.