Institutional allocations to alternative investments are set to rise in the next two years, according to a biennial survey released by Russell Investment Group.
The average hedge fund allocation in North America is set to rise to 8.9% of total assets from 7.5% in the first six months of this year, while in Japan, it is expected to grow to 9.9% from 9.3%. European institutional investors surveyed said they plan to increase hedge fund allocations to an average of 8.4% from 7.4%, while Australian hedge fund allocations are expected to remain unchanged at 4.1%.
For private equity, North American respondents had the highest average allocations in the first half of 2007, at 6.5% of total assets, and they plan to raise their exposure to 7% in two years. Japanese respondents had the lowest allocations, 3.3%, expecting to increase it to 4.2%; Europeans, now at 4.6%, expect a hike to 5.5%; while Australians plan to raise their allocations to an average of 7.6% from 6.3%.
And in real estate, North American institutional investors plan to allocate an average of 7.3% in the next two years, up from 6.7%; Japanese expect an increase to 5.7% from 4.7%; European respondents, to 9.7% from 8.9%; and Australians, to 10.5% from 9.6%.
The survey of 326 pension funds, endowments and foundations was conducted during the first half of 2007.