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The Global Alternatives Survey by Towers Watson analyses alternative investments around the world. It shows that sovereign wealth funds have their biggest allocations into private equity and real estate. Foundations have a large proportion of their assets allocated to private equity. Real estate assets account for more than half the assets of insurance companies.
Alternative investments have risen in popularity as more conventional investments have disappointed, according to Martin Goss, senior investment consultant for Towers Watson in Australia. “The ongoing global economic instability has driven all types of institutional investors towards having more diversified investment portfolios.” Goss estimates that allocations to alternative assets now account for 20 per cent of all pension fund assets globally, up from 5 per cent 15 years ago.
The Asia Pacific has a relatively small proportion of alternative investments. Europe and North America are the main areas where they are popular. According to the survey of the top alternative managers, the Asia Pacific accounts for 10 per cent of private equity fund of funds, 15 per cent of fund of hedge funds, 14 per cent of real estate, 14 per cent of hedge funds, 8 per cent of private equity, 22 per cent of infrastructure and 5 per cent of commodities.