Institutions eye alternatives as tapering draws nearer

Federal Reserve buildingInstitutional investors are investing less in public markets and more in alternatives as they react to the prospect of tapering by the US Federal Reserve and higher interest rates in the US and Europe, according to the AMP Capital Institutional Investor Research Report. Direct real estate, private equity, direct infrastructure and infrastructure debt are all receiving greater interest on the back of more positive economic expectations. AMP Capital chief executive international and head of global clients Anthony Fasso says: “Equities and fixed income still have the lion’s share of asset allocations, with 41% of respondents’ portfolios in equities and 31% in fixed income. “The survey has found, however, investors favour investments that offer value, potential for capital growth and predictable, consistent yields as global economies continue to improve. As such, they are allocating more to alternatives and, in particular, real assets. An appeal of real assets, says Fasso, is their tangibility, which offers greater stability and insulation from the risk of public equity markets. “Investors are expecting to reduce their fixed income holdings especially in government and investment grade corporate bonds. Many respondents to the survey said these investments hadn’t met expectations during the past year.” Demand for real estate was particularly strong in Europe, with almost 41% of respondents seeking to increase their direct real estate investments, followed by Asia (29%) and North America (17%). Forty-two per cent of respondents said it was likely they would invest in infrastructure debt during the next two years. Demand is strongest from institutions in Europe but is growing in Asia and North America. The respondents were contacted during the second quarter of 2013 and more than 65 senior decision makers from large institutions globally were surveyed. Collectively they manage an estimated $2.1 trillion (€1.5 trillion) and 89% of respondents were employed by firms with US$1 billion or more in assets under management. ©2013 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.