Key Takeaways
Key Takeaways
STATE OF PLAY
STATE OF PLAY
The Road Ahead
The Road Ahead
Location Matters
Location Matters
Routes to Market
Routes to Market
Key Takeaways
Current Allocations: Private alternatives make up approximately 25% of survey respondents’ portfolios. Within this allocation, real estate equity (18%), private credit (11%), private equity (10%) and real estate debt (10%) are the most widely held asset classes.
Future Allocations: Investors are most likely to increase holdings of private credit (44%), private real estate debt (42%) and sustainable equity (40%) over the next two years.
Key Risk Areas: Respondents foresee rising geopolitical risks (58%) and increased volatility in public markets (36%), fuelling demand for active strategies and private alternatives.
Geographical Focus: Developed Asia-Pacific (64%) and Emerging Europe (59%) will attract more investments over the next two years. Latin America (8%) and China (26%) see declining investor appetite over the same period.
Manager Outcomes: Most respondents (52%) say their current asset managers have underperformed in providing access to liquidity via secondary markets. Nearly one-third of respondents (32%) say their current managers have fallen short of speed and timing expectations for exit transactions.
Industry Partnerships: Fully 62% of respondents prefer large, multi-line asset management firms with broad offerings and a local presence in multiple markets. Only 22% favour small boutiques that specialise in one or more private alternative assets.
75%+
Investors will take on more risk in next two years with Asia Pacific and Europe seen top destinations.
Survey Methodology
The 19-question survey was conducted over Spring/Summer 2024. Survey respondents represent large institutions in the United Kingdom, Continental Europe, and the Middle East.
State of Play
Private alternatives make up a quarter of the survey respondents’ portfolios, and allocations are set to grow over the next two years.
What is your two-year outlook for the following investment factors?
The Road Ahead
This “risk on” posture bodes well for the outlook for private alternatives to play a key role in delivering clients’ key investment capabilities in their portfolio construction.
An overwhelming majority anticipate taking on more risk in the next two years
How do you anticipate your institution’s risk appetite is most likely to change over the next two years?
Locations Matters
Asia Pacific has increasingly become a magnet for institutional investors in private alternatives due to its high economic growth potential and strong demand for infrastructure funding.
Asia Pacific and Europe are preferred destinations for capital, while investments in LatAm and China is likely to wane in the next two years
Routes to Market
Majority of survey respondents are keen to consider investing in multi-asset solutions composed of several private alternative investments.
Large, multi-line firms prevail over boutiques in private assets
When evaluating prospective new asset managers for private alternative investments, which of the following types of firms are you likely to prefer?
METHODOLOGY
METHODOLOGY
1
Current
Allocations
2
future
Allocations
3
key risk areas
4
Geographical Focus
5
manager outcomes
6
industry partnerships
Private alternatives make up approximately 25% of survey respondents’ portfolios. Within this allocation, real estate equity (18%), private credit (11%), private equity (10%) and real estate debt (10%) are the most widely held asset classes.
Current Allocations
Click to open
Investors are most likely to increase holdings of private credit (44%), private real estate debt (42%) and sustainable equity (40%) over the next two years.
2. Future Allocations
Respondents foresee rising geopolitical risks (58%) and increased volatility in public markets (36%), fuelling demand for active strategies and private alternatives.
3. Key Risk Areas
Developed Asia Pacific (64%) and Emerging Europe (59%) will attract more investments over the next two years. Latin America (8%) and China (26%) see declining investor appetite over the same period.
4. Geographical Focus
Most respondents (52%) say their current asset managers have underperformed in providing access to liquidity via secondary markets. Nearly one-third of respondents (32%) say their current managers have fallen short of speed and timing expectations for exit transactions.
5. Manager Outcomes
Fully 62% of respondents prefer large, multi-line asset management firms with broad offerings and a local presence in multiple markets. Only 22% favour small boutiques that specialise in one or more private alternative assets.
6. Industry Partnerships
