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Towers Watson: pensions represent 36% of top 100 alternative manager assets

Monday, August 26, 2013
Opalesque Industry Update - A Towers Watson study has shown that pension fund alternative assets allocations are now nearly 20% of all pension fund assets across the globe. The 2012 Global Alternative Survey notes the number as a 5% increase from 15 years ago.

The research, which was conducted by Towers Watson, and which included the diverse ranges of figures and asset calculation, showed that pensions fund representing 36% of the top 100 manager assets figured into the “alternative” category.

Also noted is the wealth managers holding 19% , insurance companies holding 9%, sovereign wealth funds sitting at 6%, and banks holding at 5%, with funds of other sub-funds sitting at 3%. Endowments and foundation funds were in last at 2% of the overall tallies.

Craig Baker, who headed the Towers Watson Investment research stated the pensions have always been a large investor group for alternative managers. He noted that the trend will persist for the foreseeable future.

"For almost all of the past ten years of this research we have seen increasing allocations to alternative assets by a wide range of investors.”

Baker continued by stating: "Not only has the appeal of alternative assets broadened to include insurers and sovereign wealth funds, but the range of alternative assets has also increased beyond the likes of real estate and private equity to include direct hedge funds, infrastructure and commodities. It is therefore not surprising, that allocations to alternative assets by pension funds for example now account for around 19% of all pension fund assets globally, up from 5% 15 years ago."

Such assets increased nearly 8% from 2012 numbers and reached $1.3 trillion according to the ranking of top 100 asset managers pension funds.

Regarding alternatives, the largest share of pension was held in real estate managers with 39%. This was followed by private equity funds of funds at 20% and private equity at 14%. Hedge funds sat at 9% overall, tied with infrastructure, and edging out funds of hedge funds at 7%. Commodities were at 1% of overall.

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