THE PROFITABILITY OF ALTERNATIVE ASSETS EXCEEDS INVESTORS’ EXPECTATIONS

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  • Investors also cite reliable revenue flow as a reason to assign real estate, infrastructure and private debt
  • This appetite occurs in a period of relatively strong performance

According to the latest Preqin survey on alternative asset investors, institutional portfolios of alternative assetsare becoming more diverse: in June 2015, 39% of investors allocated three or more different alternative assets; that figure is now 50%. In all asset classes, investors explained that diversification is a main reason to invest in alternative assets.

Investors also cite reliable revenue flow as a reason to assign real estate, infrastructure and private debt , as well as low correlation with other asset classes as a reason to invest in hedge funds and natural resources.

In most asset classes, a greater proportion of investors plan to invest more capital in alternatives than those who plan to invest less in the next year. This appetite occurs in a period of relatively strong performance: in all asset classes, the performance of the portfolio in the last 12 months has met or exceeded the expectations of investors

However, the majority (56%) of institutional investors believe that the stock market is at an all time high , and investors’ return expectations for private equity, real estate and infrastructure have fallen since June 2015.

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