Institutional investors arent letting the 31% decline in their asset values last year stop them from continuing to move into international investments, hedge funds, private equity and real estate, according to a Greenwich Associates survey.
Dont just do something, stand there, is the name of the game for institutional investment managers in the first quarter, according to Greenwich managing director Dev Clifford, co-author of a report about the survey, U.S. Investment Management: Institutions Respond to Crisis.
Twenty-eight percent of institutional investors surveyed plan to continue to reduce their allocation to U.S. equities, according to the survey, with 30% increasing private equity allocations, 25% increasing hedge funds and 20% equity real estate. Only 3% to 4% said they plan to decrease allocations to those three asset classes.
Mr. Clifford said asset-liability studies and searches also are likely to increase this year, which could both help and hurt consultants.
(Managers) might face pressure because of the advice they got, and if they feel that the advice broke down, it might call into question the relationship with the consulting firm, he said. (Consultants) have to have a pretty compelling argument for the continuing validity of those models or value of those models.
He said this could lead to searches for consultants as well as for managers by the middle of the second quarter.
The Greenwich survey, conducted from July to October, included interviews with 578 corporate funds, 229 public funds, and 241 endowments and foundations in the United States.