The assets managed by the 100 largest managers of alternative investment globally increased 3% during 2015 to a total $3.6 trillion, a Willis Towers Watson’s survey said.
The consultant’s latest Global Alternatives Survey also found real estate managers continue to hold the largest share of these assets, accounting for 34% or more than $1.2 trillion. In 2014, real estate managers accounted for 33% of a total $3.5 trillion of assets invested in alternatives.
Hedge funds were the second-largest asset class, at 21%, vs. 23% in 2014. Private equity fund managers took an 18% share, down from 22%.
Among funds of funds, private equity funds of funds took a 12% share of assets, up from 10% a year earlier, while hedge funds of funds accounted for 6% in 2015, the same percentage as in 2014. Infrastructure assets totaled 5%, up one percentage point, and illiquid credit also accounted for 5% of total assets in 2015, vs. 3% in 2014.
The survey also found that pension fund assets account for 34% of the top 100 alternative money managers’ assets, compared with 33% in 2014.
In a separate survey of general partners by MVision Private Equity Advisers, almost half expect to go head-to-head with limited partners in acquisitions, while 1 in 3 already have done so in the last year.
Sixty-two private equity firms were questioned, and almost 50% said they viewed mega LPs — investors with the capital to invest directly in transactions that are usually reserved for private equity funds — as direct competitors in deal origination. Almost 40% believe this competition has led to inflated valuations, since LPs that are working to different targets can afford to offer higher bids on deals. One-third of GPs said direct investment will make it harder for them to secure commitments in future fundraising in the longer term.
Almost half of respondents said concern over industry fees is the main contributor to the rise in direct investment.