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Alternative assets under administration soar 14% in 2016 — report

Alternative assets under administration in 2016 totaled $7.64 trillion, up 14.2% from the prior year, eVestment said in a survey released Thursday.

Big gains in private equity and real asset AUA, sparked by more alternative managers outsourcing administration duties, sparked the 2016 increase, said Mike Cho, senior research analyst at eVestment.

SS&C GlobeOp ranked first among firms with total alternative assets under administration of $1.32 trillion as of Dec. 31, boosted by 2016 acquisitions of Citigroup Alternative Investor Services, Wells Fargo Global Fund Services and Conifer Financial Services. State Street Alternative Investment Services was second with $1.254 trillion, followed by Citco Fund Services at $1.047 trillion and Bank of New York Mellon (BK) Alternative Investment Services at $775 billion.

At the end of 2015, State Street led in AUA with $1.84 trillion, with Citco second at $1.048 trillion and Bank of New York Mellon Alternative Investment Services third at $980 billion; SS&C was fifth with $658 billion. State Street and BNY Mellon both had declines in hedge fund and hedge fund-of-fund AUA in 2016, while BNY Mellon also had declines in private equity AUA.

Private equity fund administration assets soared in 2016, up 43.9% to $2.163 trillion. Along with the increase in manager outsourcing, the rise was fueled by more firms responding to the survey, Mr. Cho said.

Hedge fund assets under administration were $3.923 trillion, up 5.2%, while administrators of hedge funds of funds saw assets fall 5.7% to $810 billion. Peter Laurelli, eVestment vice president, research, said hedge fund administrators saw new fund launches and performance gains, “with the big detractor being investor outflows.”

For the first time, eVestment sought data on real asset fund administration; in prior years, surveys asked for real estate administration information. As of Dec. 31, assets under real asset administration totaled $638 billion; in 2015, real estate assets under administration totaled $414 billion. Mr. Cho said the real asset classification was made to capture the increase in infrastructure assets under administration, though eVestment did not break out the subasset classes under real assets.

Also new in the 2016 survey was assets under portfolio administration directly for asset owners like pension funds; those totaled $1.75 trillion. Those assets are not included in the total alternative AUA.

Mr. Cho said fund administration merger and acquisition activity is expected to continue in 2017. “As the industry gets more competitive, (firms) will try to fill more holes that they might have, such as regionally or by asset class,” Mr. Cho said.