Alternative assets under administration in 2014 totaled $6.862 trillion, up 16.8% from the prior year, eVestment said in a survey released Monday.
Private equity and real estate fund assets under administration, which eVestment combines, outgrew assets under hedge fund administration and hedge funds-of-funds administration on a percentage basis, although hedge fund assets under administration were almost three times that of private equity and real estate, the eVestment report showed.
Private equity and real estate AUA rose 23.7% in the 12 months ended Dec. 31, to a combined $1.58 trillion, while hedge fund AUA grew 15.5% to $4.222 trillion and hedge funds-of-funds AUA grew 11.9% to $902 billion.
State Street Alternative Investment Solutions retained the top spot in hedge fund and private equity-real estate assets under administration in 2014, though the latter category saw a slight decline compared to 2013. Hedge fund AUA at State Street totaled $772.2 billion, up 9% from the previous year; while private equity-real estate AUA totaled $422.6 billion, down 0.8%.
Second behind State Street in hedge fund AUA were Citco Fund Services, at $624 billion, up 8.3%; BNY Mellon Alternative Investment Services, $547.7 billion, up 17.9%; SS&C GlobeOp, $445 billion, a 5.7% increase; and Northern Trust, $300.4 billion, up 115.9%. Much of that gain was because Northern Trust last year began replicating middle- and back-office services for $140 billion in assets of Bridgewater Associates.
Among private equity-real estate fund administrators, State Street was followed by SEI, at $114.8 billion, up 21.9%; SS&C GlobeOp, $114 billion, up 22.6%; and Northern Trust, $97 billion, up 9%. Citi Fund Services, which ranked second at $147.3 billion, only provided data as of Dec. 31, 2013.
BNY Mellon Alternative Investment Services ranked the highest in assets under administration for hedge funds of funds, at $142.5 billion, up 13.7%. Second was Citco Fund Services at $135 billion, up 8% over 2013, followed by State Street Alternative Investment Solutions, $124.4 billion, up 12.5%; SEI, $72.6 billion, up 9.8%; and SS&C GlobeOp, at $68 billion, a 65.9% gain.
Administrators surveyed by eVestment said private equity-real estate fund administrators' AUA will continue to increase in the future as more money managers move to third-party firms for such duties, said Peter Laurelli, eVestment vice president. That trend will be more prevalent in Europe because of regulatory requirements in the European Union under the Alternative Investment Fund Managers Directive. Currently, as much as 70% of fund administration in those assets classes is done internally by private equity and real estate managers, according to the report.
Hedge fund and hedge funds-of-funds AUA growth, meanwhile, will be spurred more by the introduction of more funds, Mr. Laurelli said. According to the report, almost all hedge fund and hedge funds-of-funds administration is done by third parties.