Institutional investors’ appetite for and satisfaction with alternative investments is high and growing, new survey results from alternative investment industry researcher Preqin showed.
Close to half of institutions that invest in each of the four main alternative asset classes — private equity, hedge funds, real estate and infrastructure — intend to maintain their current allocation over the longer term.
In private equity, 36% of respondents said they will increase their fund’s allocation, 55% will maintain their current allocation and 9% intend to decrease private equity exposure, said Preqin researchers in the firm’s Investor Outlook report for the second half of 2014 released Wednesday.
Half of hedge fund investors said they will not change their current allocation, while 35% said they intend to increase their allocation and 15% said they will lower their hedge fund investments.
For real estate, 52% of respondents will keep their allocation static while 41% will increase it and 7% will lower it.
Infrastructure investments edged out real estate with the greatest percentage — 42% — of institutional investment executives indicating that they will increase their allocations to the asset class over time. About 45% of infrastructure investors will maintain their present allocation and 13% will lower it.
Infrastructure also was number one in terms of investors’ satisfaction with returns for the 12 months ended June 30. Fully 90% of respondents said returns for the asset class met or exceeded their expectations.
Private equity returns, followed closely by real estate returns, came next with 86% and 85%, respectively, of those surveyed indicating matched or exceeded expectations for the asset classes.
More than a quarter (27%) of hedge fund investors said returns did not meet their expectations.
Preqin researchers interviewed more than 380 institutional investors between June and August.