Pensions are biggest funders of infra, survey finds

Of the $179bn of assets managed last year by the world’s top 50 infrastructure funds, $109bn - or about 61% - correspond to mandates on behalf of pension funds, reports a survey by Towers Watson and the Financial Times. Macquarie manages the largest amount of pension assets of all alternative asset class managers, at $52bn.

Pension funds are the biggest investors in infrastructure with over 60 percent of assets under management last year in the world’s top 50 infrastructure funds being managed on behalf of pensions, reports a survey by financial services company Towers Watson and the Financial Times newspaper.

The survey finds that the top 50 infrastructure funds manage about $179 billion in assets for their respective investors with 60.6 percent of those assets, or $108.6 billion, being managed on behalf of pension funds. This is the highest proportion of the five alternative asset classes the survey covers, which also includes real estate, private equity funds of funds (PEFoF), funds of hedge funds (FoHF) and commodities.

Infrastructure also boasts the biggest manager of pension fund assets across all asset classes – Macquarie Group – which manages $52 billion of assets on behalf of pensions – more than half of its total assets under management. Australia’s Industry Funds Management and the UK’s Hermes Fund Managers only manage assets on behalf of pension funds, the survey finds (see related links).

Of all the asset classes analysed by the survey, infrastructure is found to have the highest concentration of assets, with the top 5 infrastructure managers having 80 percent of all infrastructure assets under management.

The report also finds that the assets of the top 15 infrastructure managers increased by 43 percent from 2008 to 2009, with Macquarie increasing its assets under management by $7.2 billion during that period.

In terms of regional distribution, the majority of assets under management are located in Europe – although European assets decreased from 54 percent in 2008 to 43 percent in 2009 – followed by North America, which saw assets under management increase from 30 percent in 2008 to 36 percent last year. Asia Pacific has 16 percent of all assets under management, with other parts of the globe comprising the remaining five percent.

In a global context, infrastructure managers still look after a comparatively small amount of assets on behalf of pension funds. The survey reports that of the top 100 alternatives managers in 2009, real estate managers dominate, accounting for some 52 percent of assets, followed by PEFoFs on 21 percent, FoHFs on 13 percent, infrastructure on 12 percent and commodities on two percent.

While Macquarie topped the infrastructure and whole survey ranking for pension assets under management in 2009, HarbourVest Partners once again heads the PEFoF table with $21 billion of assets, while Blackstone Alternative Asset Management again tops the FoHF ranking on behalf of pensions with a total of $14.3 billion.

On the real estate front, ING Real Estate Investment Management is the biggest player with $32.4 billion of pension assets under management while PIMCO retains the leading position in the commodities sector, with $8.5 billion of pension assets.