The quest for yield against a backdrop of low interest rates is driving demand for alternative asset classes, according to a survey conducted by the Luxembourg funds industry association, Alfi.
Real estate, infrastructure, private equity and private debt are the alternative asset classes that are particularly benefitting, the survey found.
‘ALFI’s Real Estate Investment Funds (REIFs) Survey 2017’ concluded that in 2016 and during the first two quarters of this year, the number of Luxembourg-domiciled REIFs increased with the launch of 43 direct funds.
Of that number 16 were manager-regulated alternative investment funds and 15 were reserved alternative investment funds, known as Raifs, dedicated to real estate.
The total number of Reifs surveyed was 259, including ten investment companies in risk capital.
The survey also found a growth in private debt lending by asset managers. The aggregate amount of capital invested in regulated loan funds mid-2017 amounted to €40 billion and that the number of loan funds increased by 160% in 2017 compared to 2016.
Encouraging greater diversity in funding as banks partially retreated from the market is one of the building blocks of the EU’s Capital Markets Union initiative, Alfi said.
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