Institutional investors expect to increase allocation to alternative investments by an average of five percentage points to 19% in the next two to three years, according to Russell Investments' 2010 Global Survey on Alternative Investing released Monday.
Funding for the increase is expected to come from equity allocations, which is expected to decrease five percentage points to 40% in the next two to three years. Fixed income is expected to decrease two percentage points to 34%, cash is expected to decrease one percentage point to 1% and other category is expected to increase three percentage points to 6%.
Under the alternatives category, survey respondents indicated they would increase private equity by two percentage points to 24%, commodities by two percentage points to 7% and infrastructure by four percentage points to 6%. Other alternative investments would be decreased, hedge funds by three percentage points to 29%, real estate by two percentage points to 30% and other investments by three percentage points to 4%.
The online, telephone and e-mail survey of 119 pension funds, endowments, foundations and insurance companies, with a combined $1.3 trillion in assets, was conducted in January.
Alternative investments were defined as including hedge funds, private equity, real estate, infrastructure and commodities, and “other” alternative investments included green investing, carbon investing, timber, portfolio catastrophic loss insurance, and unspecified strategies.