Institutions Set To Ramp Up Alternative Investments

Dec 4 2007 | 7:44am ET

Institutional investors around the world have boosted their exposure to alternative investments over the past two years, and are expected to continue to do so over the next two. Allocations to hedge funds are expected to rise everywhere except Australia, where they will be flat on 4.1%, according to a new survey from Russell Investments.

In North America, hedge fund allocations are expected to rise the most, from 7.5% this year to 8.9% in 2009, while in Europe respondents think they’ll increase from 7.4% to 8.4%. And institutions responding to the survey in both regions are the most bullish on hedge fund returns over the next two years, where, along with Australia, returns are expected to average 9%. By contrast, in Japan, where hedge fund allocations are the largest (already averaging 9.3%) and most widespread (the number of Japanese respondents with hedge fund investments rose from 59% in 2005 to 71% this year), return predictions are more pedestrian at 4.6%.

Generally, respondents are more positive about private equity investments, where returns are expected to average between 8% and 13% in the next two years. Again, North Americans and Europeans are more optimistic than their Pacific Rim counterparts.

While private equity allocations in North America slipped slightly over the past two years, over the next two, institutions are expected to increase their share of the pie across the board. Leveraged buyouts remain overwhelmingly the most popular private equity strategy, especially in North America, where 71% of p.e. commitments are to LBOs.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Often seen as a passion project, or part of a philanthropic venture, rare and fine stringed instruments offer an exciting option to diversify one’s investment portfolio while providing an opportunity for an exceptional long-term investment.