Alternative investments popular
Overall allocation to alternative investment has remained stable at around 13 per cent, according to new research conducted by JPMorgan Asset Management with 282 institution respondents across 12 European countries.
The institutions have estimated they will invest €103.6 billion (£67.4bn) in alternative asset classes over the next four years.
Of those institutions surveyed, 25% are invested in all three main alternative asset classes – real estate, private equity and hedge funds. Levels of investment in real estate and private equity have remained broadly unchanged in most European markets, except in the Nordic region where allocation to private equity has increased significantly. There has been a strong increase in hedge fund investment across Europe, where both incidence and levels of investment have doubled.
Respondents have greater conviction in their views about alternatives than in 2003. There is now a marked division between investors and non-investors – those who have already invested are keen to increase significantly their allocations while the majority of institutions that have not invested appear to have little interest in doing so.
By asset class, current hedge fund investors have the most appetite to increase their allocation, with 63% intending to do so, while 49% of private equity investors and 30% of real estate investors plan to increase their stake. Of those not planning to raise their allocation, the majority intend to maintain their current exposure, and very few investors are planning to reduce their overall exposure to alternatives.