Rising valuations and investors' search for yield pushed up the top money managers' assets under management in many alternative investment asset classes in 2014.
Infrastructure had the most growth among the alternatives investment managers, up 48% to nearly $16 billion in the 12 months ended Dec. 31, according to Pensions & Investments' annual survey of managers of U.S. institutional, tax-exempt assets. Even so, infrastructure asset growth slowed from the nearly 72% increase in 2013.
Energy was the next fastest growing alternatives asset class, up 41% to $3.2 billion. Energy managers regained territory they lost in 2013, when energy assets dropped 75% to $2.25 billion.
Managers of another energy-related strategy, master limited partnerships, also increased their assets under management by 18.5% to $7.2 billion, exhibiting a slower growth rate than the 68% in 2013.
Other alternative asset classes showing strong double-digit growth included buyouts, up 35% to $9.4 billion, and real estate equity, gaining 24.5% to $366 billion. Those growth rates sped up mightily from the previous survey's gains of 14.4% and 3.4%, respectively.
The largest 25 real estate equity managers fared a bit better than the entire group, with their combined real estate equity assets up 28.7% to $321.3 billion at year-end 2014. The 25 largest managers of equity real estate account for 88% of the total real estate equity assets reported in 2014, compared with 85% a year earlier and 84% of all real estate equity assets in 2012
Within the real estate equity category, domestic assets among the largest 25 managers grew 17.4% to $272.4 billion while international real estate was up 124% to $39.5 billion. The year before, international real estate equity assets had fallen 31.2%.
The top 25 real estate equity managers also saw their assets in timber double, to $9.4 billion, in the 12 months ended Dec. 31. During the same period, overall timber assets fell nearly 2.7% to $15 billion, a small dip compared to the previous survey when overall timber assets dropped 6.4%.
By comparison, the NCREIF Property index rolling four-quarter total return for 2014 was 11.82%, with 5.36% income return and a 6.21% appreciation. The NCREIF Timberland index rolling four-quarter return was 10.48%, with 2.86% from income and 7.46% from price appreciation.
Real estate investment trust assets overall grew 18% to $80.6 billion; the total of the largest 25 managers of REIT assets for U.S. institutional tax-exempt clients was up 18% to $77.2 billion. The FTSE NAREIT All-Equity REITs index was up 28.03% for the 12 months ended Dec. 31.