A survey of pension funds worldwide shows that pensions invested more than $62 billion in alternative assets last year. The survey, which was conducted by Reigate, England-based consulting firm Watson Wyatt Investment Consulting and released last week, found that pensions invested $17 billion in private equity in 2004.
Private equity, real estate and hedge funds together grew by $161 billion last year, bringing the total capital managed in alternative assets to about $1 trillion.
The survey found that real estate is the most popular alternative asset class for pension funds in Europe and North America, with private equity and hedge funds coming in No. 2 and No. 3, respectively. Asian pensions reported the opposite, with hedge funds being the most popular alternative asset class.
Private equity pros increased their assets by 14% last year and now manage about $193 billion. Private equity accounted for 17% of new alternative investment capital from North America, according to the survey. The survey also found that private equity makes up 38% of all alternative assets managed.
Roger Urwin, Watson Wyatt’s global head of investment consulting, said in a statement that pension funds around the globe have heard the message of diversification, and private equity has benefited from that.
“Private equity is slowly gaining acceptance among pension funds globally as a logical addition to their portfolios,” he says.
Hamilton Lane Advisors manages the largest amount of advisory assets in private equity with about $39 billion, according to the survey, whereas Pacific Corporate Group manages the most in private equity fund-of-funds assets, with $22 billion.
The survey gathered data from 125 fund managers.