NEW YORK — About one-quarter of midsize U.S. institutional investors plan to increase allocations during the next 12 months to specialty managers, according to a new survey by JPMorgan Asset Management. Twenty-five percent of the respondents intend to raise their exposure to international equity, 24% to real estate, 21% to private equity and 13% to hedge funds.
Fifty-one percent of the 194 financial officers of defined benefit plan and non-profit organizations surveyed said they were familiar with the concept of portable alpha, and 44% said they were familiar with absolute return strategies. Still, 11% of fund managers surveyed said they already employ or soon will implement a portable alpha strategy and 24% said they are considering it. More than one-third (36%) of non-profit fund managers said they are considering portable alpha.
Of the funds using, about to use, or considering portable alpha, 40% said hedge funds will provide the alpha engine and 31% named international equity.
More midsize institutions are using absolute return strategies (25%) than portable alpha and 21% are considering adding an absolute return approach to their portfolios. Among the non-profit survey subset, 37% said they invest in absolute return strategies, compared with 9% for defined benefit plans.
JPMorgan Asset researchers found portfolios of non-profit organizations more heavily invested in alternatives, except for real estate, where 35% of both defined benefit plan and non-profit officers surveyed said they invested. For private equity, 29% of non-profit officials said they were invested, compared with 10% of defined benefit plans. Non-profit investment in hedge funds was much higher at 44% of respondents, compared with 9% of midsize defined benefit plans.
All but 4% of those surveyed had fund assets of less than $600 million. The survey was conducted between mid-April and early June.