Preqin: Investors look to diversify with alternative assets
24 August 2018 London
Image: Shutterstock
Half of investors now allocate to three or more asset classes, up from two-fifths in 2015, according to a survey by Preqin, a source of data and intelligence for the alternative assets industry.
Preqin found that in June 2015, some 39 percent of investors allocated to three or more different alternative assets, but in 2018, that figure stands at 50 percent (as of June).
Some 79 percent of institutional investors allocate capital to alternative assets, and half invest in three or more asset classes.
The largest proportion of investors have exposure to private equity and real estate funds (57 percent and 59 percent of investors respectively).
Across all asset classes, investors reported that diversification is the main reason for investing
in alternative assets.
Investors also cited reliable income stream as a reason for allocating to real estate, infrastructure and private debt, as well as citing low correlation to other asset classes as a reason to invest in hedge funds and natural resources.
Across most asset classes, larger proportions of investors plan to invest more capital in alternatives than those that plan to invest less in the coming year, the survey found.
Across all asset classes, portfolio performance over the past 12 months met or exceeded investor expectations.
However, the majority (56 percent) of institutional investors believe that the equity market is at a peak, and investors’ return expectations for private equity, real estate and infrastructure have fallen from June 2015.
Across most asset classes, more investors plan to increase investments in alternatives in the coming year than those that plan to invest less—43 percent said they plan to invest more in infrastructure.
While some 47 percent of private debt investors view Europe as presenting the best opportunities in the next 12 months. Though, in all, other asset classes investors cite North America as the region of most interest.
Preqin’s results were based on a survey of 530 institutional investors carried out in June 2018.
Amy Bensted, head of hedge funds at Preqin, said: “The diversification benefits of alternative assets continue to attract institutional investors. Four out of five institutions now have exposure to at least one alternative investment fund, and one in ten have exposure across all six asset
classes.”
She added: “Investors seek to diversify into alternative assets for many different reasons: for private equity, it’s the potential for high absolute returns; for real estate, infrastructure and private debt it is to add a reliable income stream; and for hedge funds to reduce correlation to other assets.”
Preqin found that in June 2015, some 39 percent of investors allocated to three or more different alternative assets, but in 2018, that figure stands at 50 percent (as of June).
Some 79 percent of institutional investors allocate capital to alternative assets, and half invest in three or more asset classes.
The largest proportion of investors have exposure to private equity and real estate funds (57 percent and 59 percent of investors respectively).
Across all asset classes, investors reported that diversification is the main reason for investing
in alternative assets.
Investors also cited reliable income stream as a reason for allocating to real estate, infrastructure and private debt, as well as citing low correlation to other asset classes as a reason to invest in hedge funds and natural resources.
Across most asset classes, larger proportions of investors plan to invest more capital in alternatives than those that plan to invest less in the coming year, the survey found.
Across all asset classes, portfolio performance over the past 12 months met or exceeded investor expectations.
However, the majority (56 percent) of institutional investors believe that the equity market is at a peak, and investors’ return expectations for private equity, real estate and infrastructure have fallen from June 2015.
Across most asset classes, more investors plan to increase investments in alternatives in the coming year than those that plan to invest less—43 percent said they plan to invest more in infrastructure.
While some 47 percent of private debt investors view Europe as presenting the best opportunities in the next 12 months. Though, in all, other asset classes investors cite North America as the region of most interest.
Preqin’s results were based on a survey of 530 institutional investors carried out in June 2018.
Amy Bensted, head of hedge funds at Preqin, said: “The diversification benefits of alternative assets continue to attract institutional investors. Four out of five institutions now have exposure to at least one alternative investment fund, and one in ten have exposure across all six asset
classes.”
She added: “Investors seek to diversify into alternative assets for many different reasons: for private equity, it’s the potential for high absolute returns; for real estate, infrastructure and private debt it is to add a reliable income stream; and for hedge funds to reduce correlation to other assets.”
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