The unstoppable rise of alternatives
July 17, 2017

The world's largest 100 alternative asset managers saw assets under management increase by 10 percent in 2016, rising to US$4.0 trillion, according to the 2017 edition of Willis Towers Watson's Global Alternatives Survey.

The survey, which WTW says captures long-term institutional investment trends by seven main investor groups across ten alternative asset classes, showed that of the top 100 alternative investment managers, real estate managers have the largest share of assets (35 percent and over $1.4 trillion), followed by private equity fund managers (18 percent and $695 billion), hedge funds (17 percent and $675 billion), private equity funds of funds (PEFoFs) (12 percent and $492 billion), illiquid credit (9 percent and 360 billion), funds of hedge funds (FoHFs) (6 percent and $228 billion), infrastructure (4 percent and 161 billion) and commodities (1 percent).

In terms of the growth 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 $178 billion to $360 billion. Conversely, assets allocated to direct hedge fund strategies among the top 100 asset managers fell over the period, from $755 billion to $675 billion.

Luba Nikulina, Global Head of manager research at Willis Towers Watson, said: "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. It appears that the growing groundswell of negative sentiment that has arisen due to the aforementioned issues is now showing up in the decisions of asset allocators.

"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."





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The world's largest 100 alternative asset managers saw assets under management increase by 10 percent in 2016, rising to US$4.0 trillion, according to the 2017 edition of Willis Towers Watson's Global Alternatives Survey.

The survey, which WTW says captures long-term institutional investment trends by seven main investor groups across ten alternative asset classes, showed that of the top 100 alternative investment managers, real estate managers have the largest share of assets (35 percent and over $1.4 trillion), followed by private equity fund managers (18 percent and $695 billion), hedge funds (17 percent and $675 billion), private equity funds of funds (PEFoFs) (12 percent and $492 billion), illiquid credit (9 percent and 360 billion), funds of hedge funds (FoHFs) (6 percent and $228 billion), infrastructure (4 percent and 161 billion) and commodities (1 percent).

In terms of the growth 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 $178 billion to $360 billion. Conversely, assets allocated to direct hedge fund strategies among the top 100 asset managers fell over the period, from $755 billion to $675 billion.

Luba Nikulina, Global Head of manager research at Willis Towers Watson, said: "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. It appears that the growing groundswell of negative sentiment that has arisen due to the aforementioned issues is now showing up in the decisions of asset allocators.

"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."



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