Institutional investors are most likely to continue increasing allocations to alternative asset classes, especially direct infrastructure, private equity and listed real estate, according to a new survey conducted by AMP Capital Institutional Investor.
AMP surveyed global institutional investors, managing a collective US$1.9 trillion, revealed a net increase in allocations to alternative investments.
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In 2013, an increase in their allocation to alternatives was expected by nearly a third of survey participants, with listed and unlisted real estate and infrastructure making up one of the fastest growing segments
The survey found that an increase in direct/unlisted investments is expected in the coming year by 36% of respondents in Asia, 46 % of those in Europe, and 38% in the Americas.
Out of the existing 30% asset allocation strategies, more than 10% is held in real assets, according to the survey findings revealed. The findings also revealed that only 72 % of respondents would like to increase investment in real estate, 56% in infrastructure, 28% in infrastructure debt, and 17% in commodities.
The survey is expecting an increase in allocation of more funds to real assets in 2013, by 46% of European investors, compared with only 18 % in Asia and 28 % in the Americas.
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By GlobalDataAccording to the survey, 32 % of respondents are more likely to expand into new asset classes such as infrastructure, private equity, real estate and renewable energy, while 27 % of them expect to limit risk in various ways, and 24 % to increase their roster of managers.
Global and domestic government bond holdings were increased by 29 % and 28 % of respondents in Q1 2013.
Only 9% of European investors planned to move out of cash or fixed income compared with 23% in the Americas and 27% in Asia.
AMP Capital chief executive international and head of global clients ,Anthony Fasso, said: "The trend for large institutional investors globally to increase their allocations to alternative asset classes is set to continue.
"This suggests that investors are seeing private, direct investments as an attractive source of alternative returns with less volatility than long-term equity and bond investments, despite the often illiquid nature of direct investments such as private equity, infrastructure and direct real estate.
"A rotation out of bonds and into equities has not been widely adopted among global institutional investors. Rather we see them moving out of cash and into both bond and equity investments, and making shifts within their fixed income investments by moving away from sovereign bonds and into high yield corporate debt."
