The vast majority (97%) of institutional investors, including wealth managers and pension funds, have already increased their allocations to alternatives in the past 12 months, according to research from Managing Partners Group (MPG).

Findings revealed that the perception of alternative asset classes has changed over the past two years, with 96% of respondents stating that they have become more positive about alternatives, while 33% have become much more positive.

In contrast, only 1% have become more negative about alternatives over the past two years.

Out of those who have become more positive about alternatives, the top reason for the change in attitude, cited by 58% of respondents, was increased transparency in reporting around alternatives, followed by an improved track record of returns (54%).

In addition to this, two fifths (40%) said that there are more alternative funds or investment strategies to choose from, and 15% said there is now a greater level of innovation in the alternative asset management sector.

MPG’s research also highlighted key benefits associated with alternatives, with 58% of respondents citing the attractive yield as the top benefit, while 52% highlighted the hedging against inflation, and 42% pointed to strong growth in valuations.

The survey respondents, which are collectively responsible for £258bn assets under management, also highlighted attractive diversification benefits as a key benefit (21%) alongside lower volatility (10%).

Commenting on the findings, MPG chief executive officer, Jeremy Leach, stated: “Our research shows that attitudes towards alternatives among professional investors have changed significantly in recent years, due to a number of contributing factors including improvements in reporting and greater levels of innovation.

“The alternatives sector is growing rapidly, with assets under management expected to expand to $23.2trn by 2026 and are showing their strength in times of high inflation and offering attractive yields.”


This article first appeared on our sister title, Pensions Age.

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