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Filed Under:Life Insurance, Life Planning Strategies

Why global investors are pouring funds into alternative assets

More than 35 percent of investors in each of the four main alternative asset classes plan to increase their allocations.
More than 35 percent of investors in each of the four main alternative asset classes plan to increase their allocations.

Global institutional investors are boosting resources devoted to alternative asset portfolios, according to new research.

Preqin (formerly Private Equity Intelligence) discloses this finding in an August report, Preqin Investor Outlook: Alternative Assets, H2 2014. The research is based on a survey of over 380 global investors in alternative assets throughout June, July and August 2014.

The research shows that nearly one-third (30 percent) of investors have grown investment teams devoted to private equity, hedge fund, real estate and infrastructure opportunities over the past two years. A similar proportion of institutional investors expect to expand their teams over the next two years.

The report notes that more than 35 percent of investors in each of the four main alternative asset classes plan to increase their allocations over the long term.

“Institutional investors around the world are generally very positive about their investments in alternative assets at the moment,” says Preqin Head of Real Assets Products Andrew Moylan. “Although hedge funds have not had the best start to 2014 in terms of returns, all four main alternative asset classes are generating solid performance figures over longer investment horizons. And as a result, investors are mostly satisfied with their portfolios.

Among the report’s additional findings:

● Only 4 percent of investors have decreased the size of their alternative assets investment team over the past year, with 66 percent having made no changes.

● 41 percent of private equity investors use an internal investment team to source new investment opportunities. This compares to 27 percent of hedge fund investors, 25 percent of real estate investors and 14 percent of infrastructure investors.

● At least a third of investors in each alternative asset class feel positively about the respective asset classes, with private equity investors most positive (51 percent).

● Hedge fund investors are least satisfied with their investments over the past 12 months, with 27 percent feeling their hedge fund investments have fallen short of expectations.

● A third of real estate investors feel their investments have exceeded expectations, with 14 percent of infrastructure investors, 12 percent of private equity investors and 9 percent of hedge fund investors feeling the same.

Read the full Preqin report here.

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