Alternative Assets Under Administration Hit $6T

Mar 11 2014 | 11:38am ET

Alternative fund administrators had $6.37 trillion in assets under administration in H2 2013, up 6.23% from the first half of the year, according to a recent industry survey.

eVestment polled 41 firms—from some of the largest to niche administrators of hedge funds, funds of funds, private equity, real estate, alternative '40 Act funds and UCITS—in January and February 2014.

“Increasing direct institutional investment to alternatives continues to support the upward trend in AUA among our survey participants,” said eVestment vice president and head of research Peter Laurelli. “However many firms cited regulation as a burden driving up costs in technology, which they expect may filter down to investors.”

Respondents ranked North America number one in terms of expected business growth in 2014, followed by Asia Pacific, Europe, Latin America, the Middle East and Africa. Administrators cited language barriers and less-developed financial sectors as barriers to growth in emerging markets.

Almost 82% of  respondents said costs associated with servicing alternative investment funds increased in 2013 compared to 2012, particularly those associated with technology.

Most administrators felt that clients faced with rising costs would pass them on to end investors via higher operational fees. The number two response was “costs retained by service provider/negotiated reduction in fees,” followed by “costs absorbed by client management company” and “costs subsumed by higher management fees.”

Survey participants expected hedge funds to see the greatest growth in assets in 2014, followed by private equity, real estate, alternative '40 Act funds, funds of hedge funds and alternative UCITS.

Within the hedge fund arena, participants ranked equity the hedge fund strategy in which they anticipated the most growth, followed by event-driven, credit, multi-strategy and macro strategies.

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