U.S. institutional investors expect to continue allocating more to alternative strategies, while long-only active equity and fixed-income strategies could see considerable churn, according to a recent survey by Keefe, Bruyette & Woods.
The survey garnered 37 responses from chief investment officers or other institutional investment executives with asset allocation responsibilities.
As many respondents expect to increase their allocations to long-only strategies as decrease them, although within that broad spectrum global equity allocations appear poised to encroach on domestic allocations. The KBW report said that trend should favor money managers such as Franklin Resources, BlackRock, Affiliated Managers Group and T. Rowe Price.
Close to 40% said they’re looking to increase allocations to hedge funds and commodities as well, and more than 30% are looking to add to their real estate, infrastructure and energy investments.
The report suggested the prevailing low-interest-rate environment was not providing a noticeable boost for active equity strategies. As a whole, allocations to fixed income might be poised to fall modestly, but growing allocations to higher-return bond strategies would mitigate the impact on bond managers, the report said.
Robert Lee, the KBW analyst who wrote the report, couldn’t immediately be reached for further comment.
Separately, in a webcast last week, J.P. Morgan noted that rebalancing by institutional investors following the market’s recent volatility has favored a handful of strategies, including high-dividend equity strategies and actively managed emerging markets equity strategies.