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Largest alternatives managers gain 10.4% in AUM — Willis Towers Watson

The 100 largest alternatives money managers recorded a 10.4% increase in assets under management to $4.06 trillion in 2016, with real estate managers taking the lion's share, Willis Towers Watson's Global Alternatives Survey found.

Real estate managers accounted for 35% of assets, or $1.4 trillion, as of Dec. 31, said the report on the annual survey. That compared with 34% of assets, or $1.2 trillion, in 2015.

Private equity managers were next with $695 billion or 18% , up from $640 billion or 18% of assets in 2015. Hedge funds took third place in terms of share of AUM, with $675 billion, or 17%. That compared with $755 billion, or a 21% share.

Private equity funds of funds took a 12% share with $492 billion, up from 2015 when assets totaled $420 billion; the percentage share remained steady.

Illiquid credit money managers saw the largest growth in percentage share over the 12-month period, with $360 billion or 9% of assets, vs. $169 billion and 5% share. These managers overtook hedge fund-of-funds managers, representing $228 billion and a 6% share in 2016. In 2015, these managers had a $222 billion in assets, still accounting for 6%. Infrastructure managers had $161 billion in assets and a 4% share, vs. $167 billion and a 5% share a year earlier; and commodities managers had a 1% share at $21 billion. In 2015, these managers also took a 1% share of assets. Percentages total more than 100% for 2016 and 2015 due to rounding.

Willis Towers Watson said 96 of the managers in the survey also participated in 2015.

Pension funds remained the biggest investors in alternative asset classes, at 33% and representing $1.3 trillion of investment with these managers. That compares with a 34% share in 2015 and $1.2 trillion. Insurance companies invested $500 billion with these managers, representing 12% of total assets, up from $344 billion or 10% of assets in 2015. Sovereign wealth fund investments remained steady at $221 billion, but the share fell to 5%, down 1 percentage point from 2015. Endowments and foundations represented 2% or $95 billion of assets, up from $90 billion in 2015. Fund-of-funds investments held steady at $76 billion or 2% share, vs. $77 billion or 2% share in 2015.

The remainder of investors came from banks, wealth managers and other investors.

Overall, alternative assets under management grew to $6.5 trillion across 562 money managers, compared with $6.2 trillion across 602 managers in 2015.