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

U.S. Treasury Moves on Reinsurance Loophole

Apr 24 2015 | 5:11pm ET

The U.S. Treasury Department has released proposed rules aimed at limiting the ability...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Opportunities Ahead: Asian Fixed Income and Currency Markets

Apr 24 2015 | 6:18am ET

For hedge funds focusing on Asia, the policy uncertainty, unclear interest rate...

 

Editor's Note