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Alternative Market Briefing

Towers Watson data finds institutional investors prefer direct access into alternatives

Wednesday, February 13, 2013

Beverly Chandler, Opalesque London: Professional services firm Towers Watson claims that institutional investors continue to diversify their investment portfolios into alternative assets, increasingly via direct funds rather than funds of funds. The global data gathered by the firm shows that in 2012 its clients - which include pension funds, sovereign wealth funds and insurance companies - allocated 70% more assets to hedge fund and private market strategies than in 2010, reaching $12bn for the year.

Craig Baker, global head of investment research at Towers Watson said: "Throughout the past five years the alternative fund managers that we have put into client portfolios have shown their ability to adapt to the changing environment to generate good net-of-fees performances. Larger institutional funds are likely to continue to invest in funds directly for most alternative asset classes rather than via funds of funds as investors continue to focus on better fee structures and greater transparency."

In 2012 the number of hedge fund mandates awarded to direct funds continued to increase, especially in the macro, fixed income and reinsurance areas. Similarly within the private markets area, real estate, private equity and infrastructure, direct funds received the vast majority of assets. During the year there was particular interest in infrastructure globally, with three times more assets than in 2011 being aw......................

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