Preqin: Institutional Investors Dedicate More to Alternative Assets

Mar 5 2018 | 4:34pm ET

Four-fifths of investors invest in alternative assets, and over half invest in three or more asset classes, according to a recent Preqin survey.

The survey also finds that investors reported the greatest satisfaction with infrastructure and private equity, however, the greatest proportion are looking to allocate to infrastructure and private debt.

The results are based on a survey of 550 institutional investors conducted in December 2017.

Key investor outlook facts in the survey:

  • 80% of institutional investors currently invest in alternative assets, and over half (52%) invest in three or more asset classes. The asset classes with the highest engagement are real estate and private equity, with 59% and 58% of investors involved in each respectively.
  • Private equity and infrastructure were the most well-perceived asset classes in 2017: 63% of investors report feeling positive towards private equity, and 53% feel positive towards infrastructure.
  • Investors also said that private equity and infrastructure best met performance expectations in 2017: 95% felt that private equity met or exceeded expectations, while 93% reported the same for infrastructure.
  • Looking to the next 12 months, 48% of investors expect natural resources will perform better, and 32% expect the same of hedge funds.
  • For the coming year, the greatest proportions of investors are looking to increase allocations to private debt and infrastructure. Forty-two percent plan to allocate more capital to private debt, while 39% plan to do the same for infrastructure.
  • The majority of investors in all private capital asset classes cited valuations as a key concern in 2018, continuing a trend seen in recent years. Among private equity investors, 88% identified it as an issue.
  • Greater proportions of investors in all asset classes are finding it harder to find attractive opportunities than find it easier compared to 12 months ago. Notably, half of the investors report that it is harder to find private equity opportunities.

“Drawn by the benefits alternative assets investments offer – portfolio diversification, strong risk-adjusted returns and low correlation to other asset classes – investors have generally looked to increase their allocations to the industry year-on-year. The industry has generally sustained their confidence, and in most asset classes investor satisfaction remains high,” Christopher Elvin, head of private equity products, said in a statement. 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 47,000 professionals in 90 nations use the company’s products.

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