The Global Alternatives Survey, produced by Towers Watson and covering seven asset classes and seven investor types, showed that the top 100 alternative asset managers ranked by total AUM managed a total of US$3.3 trillion in 2013, up from $3.1 trillion in 2012.
According to the research, the largest proportion of this is managed in direct estate funds, which account for 31 per cent or $1.02 trillion, followed by private equity fund managers at 23 per cent, or $753 billion, and hedge funds, also at 23 per cent.
The survey found that Macquarie Group was the largest alternatives manager in the world, with a total of US$96 billion in alternative AUM.
Macquarie was followed by US-based investment manager Bridgewater Associates, with US$87 billion, and US investment and advisory firm Blackstone, with US$70 billion.
Based on the top 100 alternative asset managers, the survey found pension funds were the largest investors in alternative assets, at 33 per cent, followed by wealth managers and insurance companies.
Towers Watson Australia's senior investment consultant, Martin Goss, said Australian superannuation funds in particular have been significant investors in alternative assets, with Australian-domiciled investors representing 4.4 per cent of the survey.
“While the fees paid to these managers are higher than for traditional assets, Australian investors are focused on achieving the best risk-adjusted returns after all costs, and many alternative assets also provide a significant level of diversification to their portfolios,” said Mr Goss.
“That said, the focus for Australian investors has increasingly been towards direct investment products rather than fund of fund products, as investors have increased their internal resourcing and are looking for more cost-effective investment approaches.”
Towers Watson global chief investment officer Craig Baker said 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 hedge funds and infrastructure to include real assets, illiquid credit and commodities.
“It is therefore not surprising that allocations to alternative assets by pension funds, for example, now account for around 18 per cent of all pension fund assets globally, up from 5 per cent 15 years ago,” he said.
