Pensions Boost Alts. Allocations Threefold

Jul 13 2010 | 1:11pm ET

Pensions funds allocate almost three times as much money to alternative assets today than they did 10 years ago, a new study shows. But the Towers Watson report shows that real-estate funds remain the major “alternative asset” held by pensions, although hedge funds and private equity funds continue to make inroads.

Alternative assets now make up 17% of all global pension fund assets, up from 6% at the turn of the millennium. And while real-estate funds still account for 52% of that total, that’s down from 58% just two years ago.

Funds of private equity funds are the second-largest investment for pensions, with 21%, up from 20% two years ago. Funds of hedge funds came in third, at 13%, the same as in 2008. Still, Towers Watson’s Carl Hess said that hedge funds and p.e. are gaining in popularity.

“We believe that more larger investors will invest directly in future rather than through funds of funds, particularly due to positive developments on fees, which are increasingly better-aligned with investors’ interests,” he said. “This, and liquidity factors, would account for the static fund of hedge fund AUM last year and only modest AUM growth in private equity fund of funds.”

Thus, only one hedge fund or p.e. investor made Towers Watson’s list of the top 10 global alternative managers, topped by Australia’s Macquarie Group with $51.6 billion in pension fund assets invested in infrastructure. HarbourVest Partners came in ninth, with $21 billion in pension assets.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of