Global Alternatives Survey 2015

Transcription

1 Global Alternatives Survey 2015 Including the top alternative asset manager rankings July Towers Watson. All rights reserved.

2 Survey statistics 623 entries are included in the survey. The majority of the data (547 entries) comes directly from investment managers with the remainder coming from publicly available sources. This includes the Global Billion Dollar Club list, published by HedgeFund Intelligence. Investor Type Manager Type FoHF* Direct Hedge Funds* Private Equity FoF* Direct Private Equity Funds* Direct Real Estate Funds Direct Commodities Funds USD billion Direct Infrastructure Funds Real Assets Illiquid Credit Total Top 100 total assets Top 100 Pension Fund assets Top 25 Insurance Company assets Top 25 Sovereign Wealth Fund assets Top 25 Endowment & Foundation assets Top 25 Fund of Funds assets Top 25 Wealth Manager assets Top 25 Bank assets , , % , % % % % % % % * Figures for some of these managers were obtained from publicly available sources and using data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence 2

3 Sections Section I Asset Class Trends Hedge Funds Private Equity Real Estate Infrastructure Commodities Real Assets Illiquid Credit Section II Top 100 alternative asset managers by AuM The top 100 alternative asset managers globally by total assets under management (AuM) 3

4 Sections Section III Analysis of top alternative asset managers by investor type Top 100 alternative asset managers by Pension Fund assets Top 25 alternative asset managers by Insurance Company assets Top 25 alternative asset managers by Sovereign Wealth Fund assets Top 25 alternative asset managers by Endowment & Foundation assets Top 25 alternative asset managers by Fund of Funds assets Top 25 alternative asset managers by Wealth Manager assets Top 25 alternative asset managers by Bank assets Section IV Total universe Analysis of all asset managers Complete ranking of all asset managers 4

5 Section 1 Asset Class Trends

6 Asset Class Trends Hedge Funds - Key Trends The evolving HF landscape Institutional investors continue to use hedge funds to access skill and build diversity into portfolios. This is particularly true at a time when beta valuations are coming under pressure, and the best way to protect value into the next phase of the cycle is through manager skill and by constructing portfolios with differentiated strategies. The hedge fund industry has come under increasing pressure in recent times with accusations of high fees and dispersed returns; and diminishing skill levels across the industry have led to benchmark returns remaining uninteresting. Notwithstanding, the top managers in the industry continue to add value and crucial diversity to portfolios. However, during the next stage of the market cycle it will be critical for hedge funds to prove their worth and diversifying characteristics as volatility picks up and investors rely more on alternatives to generate returns. Future outlook Large institutional investors no longer select managers based purely on talent, although skill remains the most important criteria. As the industry has evolved, investors are increasingly seeking more than just pooled fund investments from managers focusing on partnerships around terms, strategy focus, implementation and idea sharing. In addition, research from across the industry is increasingly highlighting areas where returns comprise not only investment skill, or alpha, but also where a portion of the returns generated are often attributable to beta. This includes bulk beta such as equity or credit, or more esoteric, or 'alternative' beta, such as insurance premia, carry, volatility and momentum. The ability to break down hedge fund returns into its component parts of alpha, beta and alternative beta allows investors to more efficiently access these returns. Furthermore, this hedge fund return deconstruction process is contributing to an increased focus by advisors and investors on building their asset allocations from a more granular return-driver perspective, instead of a traditional asset class approach. While the 'decompartmentalising' of return and risk drivers and the creation of alternative beta solutions is being seen as a threat to some hedge fund strategies, moving away from an asset class approach could very well lead to a larger alternatives allocation than clients held previously, often funded from traditional beta and indeed 'traditional' alpha. Genuine alpha remains relatively scarce and those who can access it will rightly continue to attract flows; but for those hedge fund managers who have been selling overpriced beta masked as alpha, the game is likely over. 6

7 Asset Class Trends Private Equity - Key Trends The evolving private equity landscape Fundraising in private equity is buoyant with rising markets allowing private equity managers to generate significant distributions back to their investors who in turn are looking to reinvest as the asset class has proven to generate positive returns in good and bad markets. The market had been somewhat bifurcated with those managers boasting exceptional short- and long-term track records raising capital particularly quickly while others took longer to secure capital. However, this trend has been less prevalent recently with the fund-raising tailwind meaning most institutional quality managers have been able to raise capital, especially in the larger end of the market. With all this influx of capital and cheap financing with little to no covenants, pricing both in the US and Europe is reaching all-time highs. Meticulous selectivity with managers who have proven discipline in prior cycles and have a range of skills to bring to bear on their portfolio companies will become critical in the next phase of the cycle. Future outlook Whilst the pressure on fees will be volatile and tends tobe inversely correlated with positive market sentiment, we expect continued downward pressure on fees over the long term. Part of that pressure will be from the on-going disintermediation story in private equity. This includes continued limited appetite for traditional fund of funds and increasing activity from large asset owners buying businesses directly (ie, competing with private equity managers). The secondary market continues to mature and grow in prominence, increasing the liquidity of the asset class. Of late, we are seeing some larger managers implement longer dated funds, targeting longer hold periods and charging lower fees than the traditional 12 year vehicles. In principle, we find this theme compelling, but note that getting the structure and incentives right whilst finding sufficient high quality businesses to warrant ownership for 10+ years will be critical. This is all part of the continued theme of evolution of the manager / investor relationship which we expect to continue to gather momentum as the asset class matures. We expect this trend to change the nature of the private equity relationship with increased implementation options providing more flexibility for sophisticated investors. Primary fund investing will become just one tool that large sophisticated investors use to get their private equity exposure. This will be supplemented with increased co-investing, secondary activity and strategic partnerships for investors with the scale and governance to successfully execute such strategies. 7

8 Asset Class Trends Real Estate - Key Trends The evolving real estate landscape Real estate markets have continued to perform strongly driven by investors desire for attractive yields in a low bond yield environment and, in many markets, healthy rental growth in light of stronger economic growth. In many ways it feels like Double digit returns, transaction volumes at multi-year highs, yields reaching multi-year lows, debt costs at ever lower levels on higher loan-to-value terms, regional (non-gateway) locations seeing increased investor interest, speculative development starting to re-emerge and fund raising breaking records in terms of speed and size. This being said, unlike 2007, the property yield spread relative to long term go vernment bonds shows a healthy spread, which provides some investor comfort. Further, much of continental Europe has missed much of the rally in recent years and appears some way from peak cycle behaviors. Long lease property strategies in Europe have continued to see interest from pension fund clients given the expected return differential relative to bonds. However, for the first time in several years, long lease property strategies have challenges from a weak supermarket sector where many funds have large allocations. In many regions around the world we are seeing growing interest in alternative property sectors such as healthcare, storage, student assets or the Private Rented Sector (PRS) in the UK. Strategically, the addition of these alternative sectors generally helps diversify against the cyclicality of offices which can often be a disproportional contributor to risk in portfolios. Future outlook Despite real estate looking attractive relative to bonds, we believe investors should be more patient and selective when investing new real estate allocations at the current time. We have seen growing interest in co-investments, joint ventures and direct deals as investor aim to have more control and visibility on both assets and pricing. At higher points in the market cycle this visibility appears valuable. We expect continued interest in long lease property strategies in Europe in particular growing interest in Continental European institutional clients given the launch of several new products in this market and the attractiveness of the yield spread given the very low bond yield environment. We are starting to see the development of several core open end Asian property funds in recent years. This has been a difficult market for core products given the divergence in nature of underlying real estate markets and also the fact that institutional asset lot sizes tend to be quite high. Both of these factors have led to difficulties in core funds reaching a critical mass size. The establishment of several new entrants could lead to institutions making more direct allocations to Asia in a core vehicle rather than higher risk private equity like vehicles. We expect the continued growth in alternative property sectors as investor better diversify their property allocations and take advantage of the thematic tailwinds associated with many of these subsectors like student assets (growing emerging market wealth), property healthcare (demographics) and residential/storage (urbanization). 8

9 Asset Class Trends Infrastructure - Key Trends The evolving infrastructure landscape Over recent periods fund-raising in the asset class has accelerated, although the key winners in this trend have been established managers with track-records. While there remains a trend for greater co-investment and direct deals from investors, the very largest investors in the asset class are actually reversing this trend and starting to again re-engage with traditional asset managers to assist in asset execution (both origination and asset management). However, this increased interaction has not been through traditional fund structures, but largely in the form of segregated accounts. These segregated accounts are often focused on areas where the asset owner would struggle to access without the assistance of professional expertise. Future outlook With the (justifiable) perception of higher prices in the larger infrastructure assets, there is an increasing marketing effort from managers positioning themselves as mid-market infrastructure investors. While we believe that the best midmarket managers have a structural advantage over those focusing on larger assets, there are a number of warnings; Mid-market has the potential to become a more competitive market Increasingly larger mid-market funds and a desire by many investors for co-investment are intellectually incoherent, and will lead to either disappointment of the level of co-investment offered to asset owners or asset managers potentially have to migrate towards larger investment opportunities Similar to last year, the greatest challenge (together with opportunity) is around the role that institutional investors may play in funding government - supported infrastructure projects globally. In economies where government budgets are heavily constrained, it is vital that those governments provide sufficient incentives for private capital to help address funding gaps. Renewed thinking about regulatory frameworks and risk transfer between the public and private sectors will significantly impact the amount of capital that ultimately gets invested in infrastructure assets around the world. This debate has not really moved forward over the past 12 months, and a more joined-up discussion by asset owners would help push this forward. 9

10 Asset Class Trends Commodities - Key Trends The evolving commodity landscape Trends in commodity prices have changed significantly since 2000 when average commodity prices have more than doubled compared to what we have seen in years pre In 2014 we witnessed weakening in some commodity markets, particularly the energy markets, and while the situation has somewhat stabilized now there is still a lot of uncertainty about the future outlook. Over the past 15 years, the average annual volatility of resource prices has increased significantly as well. This year oil prices have seen the most significant decline, the third largest since World War II. Similar trend was observed for other commodities which have been gradually weakening. This sentiment impacts investment decisions made by both institutional investors and asset managers. Future outlook The outlook for commodities markets remains uncertain and we have a neutral view on commodities over the short-term. Oil markets have undergone many changes and we still see uncertainty around supply and demand dynamics in the oil market. We expect that US oil production will experience further falls if the number of active rigs continues to fall. A few oil producers around the globe have suffered from unplanned disruption in 2015 owing to geopolitical tensions. On the demand side, we anticipate it to remain healthy over the rest of the year as growth conditions in most developed economies and some emerging economies remain robust. 10

11 Asset Class Trends Real Assets - Key Trends The evolving real asset landscape One of the key benefits of investing in real assets is their role as a diversifier, in terms of risks and returns in the overall portfolio. Investing in real assets is also a direct way to access resource scarcity theme and other themes such as demographic trends, climate change, technology and emerging wealth. These and some other investment characteristics of real assets continue attracting more interest from institutional investors globally. There is a wider range of strategies and implementation routes to choose from now compared to several years ago: traditional farmland strategies ranging from cash-lease to operating farms, private equity investments in agriculture across the whole value chain, investments in water via either water rights or water infrastructure, club deals formed by large like-minded investors, direct investments driven by SWFs from Middle East and Asia, investments in pooled funds, etc. This year is also characterized by growing number of offerings in global timberland, Australian livestock (beef production), aquaculture strategies and mixed strategies (eg including water rights, private equity agriculture and farming). We see emergence of relatively new strategies, such as real assets debt, water strategies and real assets strategies focused on sustainability. ESG remains an important area of focus for both investors and fund managers in real assets space. Future outlook In the low return environment investors tend to look for investments which provide strong down-side protection. Real assets due to their unique investment characteristics and in most cases their resilience to economic shocks, can serve this role to some extent. We expect that allocation to this asset class will continue to grow over time. We also expect to see more institutional platforms being built in agriculture (eg a large institutional investor/asset manager partners up with a local player), more separate accounts being offered to Asian investors in timber and agriculture, more direct investments from SWFs globally in both direct farmland and also in agriculture-related businesses. We see more interest from governments in forming partnerships and investing in farmland as a way to hedge against resource and food scarcity (eg recent agreement by China and Russia to launch a $2 billion investment fund to develop agricultural projects in the two countries and set up a free-trade zone between their key farming belts). This interest will continue to strengthen based on current demographic trends and continuously growing demand for food and resources driven by emerging wealth in developing countries. We anticipate to see further evolution of product and mandate development and expect improvements in this area going forward. 11

12 Asset Class Trends Illiquid Credit - Key Trends The evolving illiquid credit landscape The illiquid credit category is inclusive of all closed-end funds with a predominant focus on credit, with the most common being private debt (e.g. direct lending, commercial real estate debt, mezzanine etc) and distressed debt. The key trend has been the pace of development of an institutional lending landscape in Europe, with numerous new funds being raised, and increasing interest in private debt strategies by investors globally. There has been an increasing trend for US based credit firms to raise funds in Europe and also for existing European mezzanine firms to raise new senior lending products. We expect this trend to continue. Investor appetite also continues apace as investors consider taking on both greater illiquidity and risk in their credit portfolios to compensate for lower yields in public markets. There are some concerns that as competition has increased in some markets that yields are not always offering sufficient compensation for the illiquidity and risk being assumed, so we would urge caution when reviewing private debt strategies today. Talking to distressed debt, with credit availability still strong managers are finding it more challenging to find opportunities. Those managers that have had more success have been those with a somewhat broader mandate in distressed debt, for example those focused on purchasing nonperforming loans from banks. European biased strategies appear to be preferred by investors currently, however there has been increased focus on the US energy sector in particular. Future outlook We expect that demand for private debt strategies will remain high, particularly for those asset classes offering floating rate yields. Some asset classes will, however, become less attractive as ever more institutional capital flows into the asset class. We would also expect that distressed debt strategies will attract greater interest, with commentators talking to buoyant credit markets as possibly sowing the seed of an elevated default cycle 2-3 years out. 12

13 Section 2 Towers Watson / Financial Times Top 100 Alternative Asset Managers by Total AuM How to read this section This section shows the top 100 managers ranked by total AuM. Each manager is counted separately in each individual asset class, so they may appear multiple times if their AuM are large in more than one asset class. These top 100 are analysed in relation to the regions they invest in and in relation to assets managed by investor type.

14 Top 100 Alternative Asset Managers Executive summary Top 100 Alternative Asset Managers The top 100 alternative asset managers, ranked by total AuM, managed USD 3,501.1 bn on behalf of their investors in 2014 compared to USD 3,268.2 bn in The largest block of alternative assets is managed in Direct Real Estate Funds followed by Direct Hedge Funds, Direct Private Equity Funds, Private Equity Fund of Funds, Funds of Hedge Funds, Direct Infrastructure Funds and Illiquid Credit. There were no Real Assets nor Direct Commodities Fund managers among the top 100 ranking by total AuM. Pension Funds are the largest investors in alternative assets (33%), among the top 100 alternative asset managers, followed by Wealth Managers, Insurance Companies, Sovereign Wealth Funds, Banks, Fund of Funds and Endowments and Foundations. In terms of where the assets are invested, North America (47%) accounts for the largest amount of alternative assets, followed by Europe (36%) and Asia Pacific (9%). 14

15 Top 100 Alternative Asset Managers Top 100 Alternative Asset Managers 6% 23% 10% 22% 33% 4% 3% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Infrastructure Funds Illiquid Credit Asset class Total AuM Average Smallest Largest USD million Number of managers Funds of Hedge Funds* 213, , , , Direct Hedge Funds* 791, , , , Private Equity FoF* 342, , , , Direct Private Equity Funds* 767, , , , Direct Real Estate Funds 1,139, , , , Direct Infrastructure Funds 148, , , , Illiquid Credit 97, , , , Total 3,501, , , , * Figures for some of these managers were obtained from publicly available sources and using data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence ** Proportions might not sum up to 100% due to rounding 15

16 Top 100 Alternative Asset Managers Distribution by Investor Type 33% 8% 5% 2% 3% 19% 4% 26% Pension Fund Insurance Company Sovereign Wealth Fund Endowment and Foundation Fund of Funds Wealth Manager Bank Other Asset class Total assets Average Smallest Largest Number of managers USD million Pension Fund 1,138, , , Insurance Company 296, , , Sovereign Wealth Fund 191, , , Endowment and Foundation 84, , , Fund of Funds 116, , , Wealth Manager 652, , , Bank 127, , , * The category Other has been included for assets that could not be allocated into the survey s categories, it has not been analysed in detail. ** Proportions might not sum up to 100% due to rounding 16

17 Top 100 Alternative Asset Managers Distribution by Region and Asset Class Asset managers were requested to state where their assets are invested. Funds of Hedge Funds 14% 17% 59% 10% Direct Hedge Funds 35% 11% 45% 10% Private Equity FoF 26% 8% 60% 7% Direct Private Equity Funds 23% 9% 44% 24% Direct Real Estate Funds 44% 7% 47% 3% Direct Infrastructure Funds 40% 20% 37% 2% Illiquid Credit 53% 3% 20% 24% Total 36% 9% 47% 8% Europe Asia Pacific North America Other * Direct Commodities Fund and Real Asset managers did not present a regional breakdown ** Proportions may not sum up to100% due to rounding 17

18 Top 100 Alternative Asset Managers Comparison Includes only managers who participated in both years Total assets for the top 100 alternative asset managers increased from USD 3,126.8 bn in 2013 to USD 3,392.6 in 2014 (9%) The split by asset class is broadly similar to last year with an increase in Direct Real Estate Funds at the expense of a decrease in Direct Private Equity Funds. There are 95 managers in the top 100 that also participated in % % 22% 10% 22% 34% 4% 2% % 22% 10% 24% 32% 4% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Infrastructure Funds Illiquid Credit * Proportions might not sum up to 100% due to rounding 18

19 Top 100 Alternative Asset Managers Comparison Includes only managers who participated in both years Funds of Hedge Funds Funds of Hedge Funds assets account for 6% of all assets managed by the top 100 managers. There are 7 Funds of Hedge Funds managers in the top 100 ranking. Direct Hedge Funds There are 24 Direct Hedge Fund managers in the top 100 ranking. Direct Hedge Fund assets increased by 9%. Private Equity FoF The proportion of Private Equity FoF AuM remained steady at 10%. The are 10 Private Equity FoF managers in the top 100 ranking. Direct Private Equity Funds Direct Real Estate Funds Direct Private Equity assets proportion in the top 100 decreased from 24% to 22% in There are 19 Direct Private Equity managers in the top 100 ranking. There are 29 Direct Real Estate Funds managers in the top 100 ranking, more than any other asset class. Direct Real Estate remains the largest asset class having 34% of all assets managed by the top 100 asset managers. Direct Infrastructure Funds There are 3 Direct Infrastructure managers in the top 100 ranking. Assets increased by 8% from 2013 to Illiquid Credit There are 3 Illiquid Credit managers in the top 100 ranking. Assets increased by 5% from 2013 to

20 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence ** Figures show total capital raised since inception, obtained from publicly available sources *** Figures show total assets under management, obtained from publicly available sources Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 1 Macquarie Group Australia 92, Direct Infrastructure Funds 2 Bridgewater Associates United States 89, Direct Hedge Funds 3 CBRE Global Investors United States 82, Direct Real Estate Funds 4 Blackstone United States 80, Direct Real Estate Funds 5 TPG Capital*** United States 67, Direct Private Equity Funds 6 The Carlyle Group*** United States 64, Direct Private Equity Funds 7 TIAA-CREF United States 63, Direct Real Estate Funds 8 Blackstone United States 63, Funds of Hedge Funds 9 CVC Capital Partners** Luxembourg 60, Direct Private Equity Funds 10 UBS Global Asset Management Switzerland 60, Direct Real Estate Funds 11 J. P. Morgan Asset Management* United States 59, Direct Hedge Funds 12 AXA Investment Managers France 55, Direct Real Estate Funds 13 LaSalle Investment Management United States 55, Direct Real Estate Funds 14 Kohlberg Kravis Roberts & Co. United States 53, Direct Private Equity Funds 15 Hines United States 50, Direct Real Estate Funds 16 Principal Global Investors United States 48, Direct Real Estate Funds 17 Carlyle Investment Solutions United States 46, Private Equity FoF 18 Och-Ziff Capital Management Group United States 46, Direct Hedge Funds 19 Blackstone United States 44, Direct Private Equity Funds 20 J.P. Morgan Asset Management United States 44, Direct Real Estate Funds 21 Man Group United Kingdom 43, Direct Hedge Funds 22 Cornerstone Real Estate Advisers United States 42, Direct Real Estate Funds 23 Credit Suisse Asset Management United States 42, Direct Real Estate Funds 24 Goldman Sachs Asset Management United States 42, Private Equity FoF 25 Apollo Global Management United States 41, Direct Private Equity Funds 20

21 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence ** Figures show total capital raised since inception, obtained from publicly available sources *** Figures show total assets under management, obtained from publicly available sources Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 26 Bain Capital United States 40, Direct Private Equity Funds 27 Brookfield Asset Management Canada 40, Direct Real Estate Funds 28 Providence Equity Partners*** United States 40, Direct Private Equity Funds 29 AQR Capital Management United States 39, Direct Hedge Funds 30 Prudential Real Estate Investors United States 38, Direct Real Estate Funds 31 HarbourVest Partners United States 37, Private Equity FoF 32 Apax Partners** United Kingdom 37, Direct Private Equity Funds 33 Deutsche Asset & Wealth Management Germany 37, Direct Real Estate Funds 34 Advent International United States 37, Direct Private Equity Funds 35 AEW Capital Management (1) United States 37, Direct Real Estate Funds 36 Warburg Pincus United States 36, Direct Private Equity Funds 37 Union Investment Germany 33, Direct Real Estate Funds 38 M&G Investments United Kingdom 33, Direct Real Estate Funds 39 M&G Investments United Kingdom 33, Illiquid Credit 40 Lexington Partners** United States 33, Private Equity FoF 41 Brevan Howard Capital Management United Kingdom 32, Direct Hedge Funds 42 UBS Global Asset Management Switzerland 32, Funds of Hedge Funds 43 Hamilton Lane Advisors United States 32, Private Equity FoF 44 Ardian France 32, Private Equity FoF 45 Riverstone Holdings United States 32, Direct Private Equity Funds 46 BlackRock United States 31, Direct Hedge Funds 47 Pantheon United Kingdom 31, Private Equity FoF 48 Aberdeen Asset Management United Kingdom 30, Direct Real Estate Funds 49 Aviva Investors United Kingdom 30, Direct Real Estate Funds 50 Goldman Sachs United States 30, Direct Private Equity Funds (1) [AEW / Aurora / Mirova] is an affiliated investment management firm of NatixisGlobal Asset Management, thus contributing to the illustration of Natixis overall capabilities in global alternative offerings 21

22 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence ** Figures show total capital raised since inception, obtained from publicly available sources *** Figures show total assets under management, obtained from publicly available sources Position Name of parent organization Main country of domicile Total AuM (USD million) Asset Class 51 Oaktree Capital Management United States 30, Direct Private Equity Funds 52 Deutsche Asset & Wealth Management Germany 29, Direct Infrastructure Funds 53 Permira Advisers United Kingdom 28, Direct Private Equity Funds 54 Baupost Group* United States 28, Direct Hedge Funds 55 Adage Capital Management* United States 28, Direct Hedge Funds 56 Winton Capital Group United Kingdom 28, Direct Hedge Funds 57 Goldman Sachs Asset Management United States 27, Funds of Hedge Funds 58 EnCap Investments** United States 27, Direct Private Equity Funds 59 Renaissance Technologies United States 27, Direct Hedge Funds 60 Brookfield Asset Management Canada 27, Direct Infrastructure Funds 61 Grosvenor Capital Management United States 26, Funds of Hedge Funds 62 Silver Lake*** United States 26, Direct Private Equity Funds 63 BlueCrest Capital Management United Kingdom 25, Direct Hedge Funds 64 Millennium Management United States 25, Direct Hedge Funds 65 Standard Life Investments United Kingdom 25, Direct Real Estate Funds 66 Elliot Management* United States 25, Direct Hedge Funds 67 Hellman & Friedman** United States 25, Direct Private Equity Funds 68 Davidson Kempner Capital Management* United States 24, Direct Hedge Funds 69 Morgan Stanley Investment Management United States 24, Direct Real Estate Funds 70 Clayton, Dubilier & Rice United States 24, Direct Private Equity Funds 71 D. E. Shaw Group United States 24, Direct Hedge Funds 72 Legal & General Property United Kingdom 24, Direct Real Estate Funds 73 J.P. Morgan Asset Management United States 24, Private Equity FoF 74 LGT Capital Partners Switzerland 23, Private Equity FoF 75 Invesco United States 23, Direct Real Estate Funds 22

23 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence ** Figures show total capital raised since inception, obtained from publicly available sources *** Figures show total assets under management, obtained from publicly available sources Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 76 Citadel United States 23, Direct Hedge Funds 77 Alcentra United Kingdom 23, Illiquid Credit 78 BlackRock United States 22, Direct Real Estate Funds 79 Starwood Capital Group United States 22, Direct Real Estate Funds 80 HSBC Alternative Investments United Kingdom 22, Direct Hedge Funds 81 Prologis United States 22, Direct Real Estate Funds 82 Heitman United States 22, Direct Real Estate Funds 83 GAM United Kingdom 22, Direct Hedge Funds 84 Goldman Sachs United States 22, Illiquid Credit 85 The Permal Group United States 21, Funds of Hedge Funds 86 King Street Capital Management United States 21, Direct Hedge Funds 87 Clarion Partners United States 21, Direct Real Estate Funds 88 York Capital Management* United States 21, Direct Hedge Funds 89 BNP Paribas Investment Partners France 21, Direct Real Estate Funds 90 Morgan Stanley Investment Management United States 21, Funds of Hedge Funds 91 BlackRock United States 20, Funds of Hedge Funds 92 Viking Global Investors* United States 20, Direct Hedge Funds 93 Credit Suisse Asset Management United States 20, Direct Hedge Funds 94 Deutsche Asset & Wealth Management Germany 20, Direct Hedge Funds 95 Partners Group Switzerland 19, Private Equity FoF 96 Farallon Capital Management* United States 19, Direct Hedge Funds 97 Babson Capital Management United States 19, Illiquid Credit 98 EQT United Kingdom 19, Direct Private Equity Funds 99 Two Sigma Investments United States 19, Direct Hedge Funds 100 Grosvenor Capital Management United States 18, Private Equity FoF Total 3,501,

24 Section 3 Towers Watson / Financial Times Top Alternative Asset Managers by Investor Type A. Top 100 Alternative Asset Managers by Pension Fund Assets B. Top 25 Alternative Asset Managers by Insurance Company Assets C. Top 25 Alternative Asset Managers by Sovereign Wealth Fund Assets D. Top 25 Alternative Asset Managers by Endowment and Foundation Assets E. Top 25 Alternative Asset Managers by Fund of Funds Assets F. Top 25 Alternative Asset Managers by Wealth Manager Assets G. Top 25 Alternative Asset Managers by Bank Assets How to read this section This section shows the top 100 or 25 managers ranked by alternative assets, managed on behalf of the above seven investor types. Note: This section uses only data sourced directly from managers and excludes data derived from public sources.

25 Section 3.A Top 100 Alternative Asset Managers by Pension Fund Assets

26 Top 100 Alternative Asset Managers by Pension Fund Assets Executive summary Top 100 Alternative Asset Managers Pension fund assets managed by the top 100 alternative asset managers in the sector amount to USD 1,425.3 bn in This represents 52% of their total AuM (USD 2,749.3 bn). Direct Real Estate Funds remain the most popular alternative asset for Pension Funds (36% of assets) with six such managers in the top ten. It is followed in popularity by Private Equity FoF, Direct Private Equity Funds, Direct Hedge Funds, Direct Infrastructure Funds, Funds of Hedge Funds and Illiquid Credit. Direct Commodities Funds and Real Assets have smaller allocations relative to the other asset classes. Top 100 Average Smallest Largest USD million Pension fund assets 14, , ,329.2 Total assets 27, , ,337.8 Overall Ranking Average Total AuM No. of Managers Pension fund assets 4, ,050,

27 Top 100 Alternative Asset Managers by Pension Fund Assets Distribution by Asset Class 1% <1%% 6% 12% 20% 12% 36% 8% 4% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Real Assets Illiquid Credit Asset class Pension Fund assets Average Smallest Largest Number of managers USD million Funds of Hedge Funds 88, , , , Direct Hedge Funds 166, , , , Private Equity FoF 285, , , , Direct Private Equity Funds 171, , ,412,3 20, Direct Real Estate Funds 517, , , , Direct Commodities Funds 14, , , , Direct Infrastructure Funds 120, , , , Real Assets 6, , , , Illiquid Credit 53, , , , Total 1,425, , , , * Proportions might not sum up to 100% due to rounding 27

28 Comparison Includes only managers who participated in both years Top 100 Alternative Asset Managers by Pension Fund Assets Total Pension Fund assets of managers participating in 2013 and 2014 increased from USD 1,280.6 bn in 2013 to 1,373.7 USD bn in 2014 (7%). Pension fund asset allocation to alternatives remained broadly similar to the previous year. Direct Real Estate showed the largest increase at the expense of Private Equity FoF. There are 96 managers in the top 100 that also participated in % 1% % 12% 20% 12% 38% 9% 2% 1% 1% % 12% 21% 12% 36% 9% 2% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Real Assets Illiquid Credit * Proportions might not sum up to 100% due to rounding 28

29 Comparison Includes only managers who participated in both years Note: All data in this section refers to the Total Assets for the Top 100 Alternative Asset Managers by Pension Fund assets Top 100 Alternative Top 100 Asset Asset Managers by Pension Fund funds Assets AuM Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Real Assets Account for 6% of total Pension Fund assets, the same as in There are 8 managers in the top 100 that also participated in Account for 12% of Pension Fund assets, remaining steady as in 2013 There are 12 managers in the top 100 that also participated in Private Equity FoF managers have the second largest amount of Pension Fund assets in the survey with 19 managers in the top 100 that also participated in 2013 The proportion in total Pension Fund assets decreased marginally from 21% to 20%. There are 14 managers in the top 100 which participated in both years. Pension Fund assets have increased by 5% from 2013 to 2014 but the proportion remained broadly unchanged. Account for over 38% of Pension Fund assets in this ranking, up from 36% in Direct Real Estate Funds have the maximum number of funds (30) in the top 100 participating in both years. There are two managers in this ranking who participated in both years. The proportion of Pension Fund assets marginally decreased to 1% in Account for almost 9% of the total Top 100, remaining flat since There are 8 managers participating in both 2013 and There is only one manager which participated in both years whose proportion of Pension Fund assets remained steady at 1%. Illiquid Credit The proportion of Pension Fund assets remained steady at 2% in There are 2 managers which participated in both 2013 and

30 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 1 Macquarie Group Australia 59, , Direct Infrastructure Funds 2 Bridgewater Associates United States 53, , Direct Hedge Funds 3 Carlyle Investment Solutions United States 45, , Private Equity FoF 4 CBRE Global Investors United States 44, , Direct Real Estate Funds 5 TIAA-CREF United States 39, , Direct Real Estate Funds 6 J.P. Morgan Asset Management United States 37, , Direct Real Estate Funds 7 Blackstone United States 36, , Direct Real Estate Funds 8 Prudential Real Estate Investors United States 31, , Direct Real Estate Funds 9 LaSalle Investment Management United States 30, , Direct Real Estate Funds 10 Blackstone United States 28, , Funds of Hedge Funds 11 Pantheon United Kingdom 26, , Private Equity FoF 12 HarbourVest Partners United States 26, , Private Equity FoF 13 Goldman Sachs United States 22, , Illiquid Credit 14 Hamilton Lane Advisors United States 21, , Private Equity FoF 15 Blackstone United States 20, , Direct Private Equity Funds 16 Kohlberg Kravis Roberts & Co. United States 20, , Direct Private Equity Funds 17 Credit Suisse Asset Management United States 18, , Direct Real Estate Funds 18 Bentall Kennedy Canada 17, , Direct Real Estate Funds 19 Deutsche Asset & Wealth Management Germany 16, , Direct Real Estate Funds 20 Invesco United States 16, , Direct Real Estate Funds 21 Warburg Pincus United States 16, , Direct Private Equity Funds 22 Brookfield Asset Management Canada 16, , Direct Real Estate Funds 23 Principal Global Investors United States 16, , Direct Real Estate Funds 24 Clarion Partners United States 16, , Direct Real Estate Funds 25 Advent International United States 15, , Direct Private Equity Funds 30

31 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 26 BlackRock United States 15, , Direct Real Estate Funds 27 Grosvenor Capital Management United States 15, , Private Equity FoF 28 M&G Investments United Kingdom 15, , Illiquid Credit 29 IFM Investors Australia 15, , Direct Infrastructure Funds 30 Och-Ziff Capital Management Group United States 15, , Direct Hedge Funds 31 LGT Capital Partners Switzerland 15, , Private Equity FoF 32 Man Group United Kingdom 15, , Direct Hedge Funds 33 Oaktree Capital Management United States 14, , Direct Private Equity Funds 34 Heitman United States 14, , Direct Real Estate Funds 35 J.P. Morgan Asset Management United States 14, , Private Equity FoF 36 AEW Capital Management (1) United States 13, , Direct Real Estate Funds 37 Legal & General Property United Kingdom 13, , Direct Real Estate Funds 38 Grosvenor Capital Management United States 13, , Funds of Hedge Funds 39 Brevan Howard Capital Management United Kingdom 13, , Direct Hedge Funds 40 Standard Life Investments United Kingdom 13, , Direct Real Estate Funds 41 Riverstone Holdings United States 12, , Direct Private Equity Funds 42 Goldman Sachs Asset Management United States 12, , Private Equity FoF 43 UBS Global Asset Management Switzerland 12, , Direct Real Estate Funds 44 Morgan Stanley Investment Management United States 12, , Direct Real Estate Funds 45 Permira Advisers United Kingdom 12, , Direct Private Equity Funds 46 Pathway Capital Management United States 11, , Private Equity FoF 47 Brookfield Asset Management Canada 11, , Direct Infrastructure Funds 48 Aberdeen Asset Management United Kingdom 11, , Direct Real Estate Funds 49 AMP Capital Australia 11, , Direct Real Estate Funds 50 Adams Street Partners United States 10, , Private Equity FoF (1) [AEW / Aurora / Mirova] is an affiliated investment management firm of NatixisGlobal Asset Management, thus contributing to the illustration of Natixis overall capabilities in global alternative offerings 31

32 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 51 Oak Hill Advisors United States 10, , Direct Hedge Funds 52 Partners Group Switzerland 10, , Private Equity FoF 53 Portfolio Advisors United States 10, , Private Equity FoF 54 Ardian France 10, , Private Equity FoF 55 PIMCO United States 10, , Direct Hedge Funds 56 Starwood Capital Group United States 9, , Direct Real Estate Funds 57 Landmark Partners United States 9, , Private Equity FoF 58 Capital Dynamics Switzerland 9, , Private Equity FoF 59 Hermes Investment Management United Kingdom 9, , Direct Real Estate Funds 60 BlueCrest Capital Management United Kingdom 9, , Direct Hedge Funds 61 Pathway Capital Management United States 9, , Direct Private Equity Funds 62 Mesirow Financial Holdings United States 8, , Funds of Hedge Funds 63 The Permal Group United States 8, , Funds of Hedge Funds 64 GoldenTree Asset Management United States 8, , Direct Hedge Funds 65 Brigade Capital Management United States 8, , Direct Hedge Funds 66 Bridgepoint United Kingdom 8, , Direct Private Equity Funds 67 The Rock Creek Group United States 8, , Funds of Hedge Funds 68 SL Capital Partners United Kingdom 8, , Private Equity FoF 69 Bouwinvest REIM The Netherlands 8, , Direct Real Estate Funds 70 BlackRock United States 8, , Direct Hedge Funds 71 Babson Capital Management United States 7, , Illiquid Credit 72 Neuberger Berman United States 7, , Private Equity FoF 73 GE Asset Management United States 7, , Direct Private Equity Funds 74 Hines United States 7, , Direct Real Estate Funds 75 Alinda Capital Partners United States 7, , Direct Infrastructure Funds 32

33 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 76 PAAMCO United States 7, , Funds of Hedge Funds 77 GSO Capital Partners United Kingdom 7, , Illiquid Credit 78 PIMCO United States 7, , Direct Commodities Funds 79 Nephila Capital Bermuda 7, , Direct Hedge Funds 80 DTZ Investors United Kingdom 7, , Direct Real Estate Funds 81 Winton Capital Group United Kingdom 7, , Direct Hedge Funds 82 Aviva Investors United Kingdom 6, , Direct Real Estate Funds 83 TIAA-CREF United States 6, , Real Assets 84 BC Partners United Kingdom 6, , Direct Private Equity Funds 85 EnTrust Capital United States 6, , Funds of Hedge Funds 86 Gresham Investment Management United States 6, , Direct Commodities Funds 87 Lend Lease Investment Management Australia 6, , Direct Real Estate Funds 88 Colonial First State Global Asset Management Australia 6, , Direct Infrastructure Funds 89 BlackRock United States 6, , Private Equity FoF 90 Bain Capital United States 6, , Direct Private Equity Funds 91 Cinven United Kingdom 6, , Direct Private Equity Funds 92 BlackRock United States 6, , Funds of Hedge Funds 93 AMP Capital Australia 6, , Direct Infrastructure Funds 94 Morgan Stanley Investment Management United States 6, , Private Equity FoF 95 Abbott Capital Management United States 6, , Private Equity FoF 96 New Mountain Capital United States 6, , Direct Private Equity Funds 97 Threadneedle Investments United Kingdom 6, , Direct Real Estate Funds 98 Clayton, Dubilier & Rice United States 6, , Direct Private Equity Funds 99 Deutsche Asset & Wealth Management Germany 6, , Direct Infrastructure Funds 100 Goldman Sachs United States 6, , Direct Infrastructure Funds Total 1,425, ,749,

34 Index Dec 2010 = 100* Five-year comparison Managers that have participated for the past five years AuM Variation Total Universe Pension Fund Assets Pension fund assets managed by the 36 Fund of Hedge Funds managers that participated in the last five years rose by 3% in Average annual growth since 2010 has been 4%. Growth in pension fund assets managed by the 35 PEFoF that participated in the last five years slowed somewhat in 2014, with a rise in assets of 3%. This followed a period of steady growth between 2010 and saw significant growth in pension fund assets managed by the 46 Direct Real Estate managers that participated in the last five years, rising 13% on assets managed in This followed three years of modest decline Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Funds of Hedge Funds Direct Real Estate Funds Direct Infrastructure Funds Direct Private Equity Funds Private Equity FoF Direct Commodities Funds Direct Hedge Funds Pension fund assets managed by the 16 Direct Commodities Fund Managers that participated in the last five years increased up to 2012 but declined in the last two years, falling 18% in Pension fund assets managed by the 33 Direct Infrastructure Fund Managers that participated in the last five years rose by 3% in 2014 and have been growing steadily since Pension fund assets managed by the 47 Direct Hedge Fund Managers that have participated in the last four years have grown by 30% since 2011, rising 5% in the past year. Pension fund assets managed by the 30 Direct Private Equity Fund Managers that have participated in the last four years fell by 5% in 2014, following a period of steady growth between 2011 and *For Direct Hedge Funds and Direct Private Equity Funds index starts at Dec