Alternatives strategies and passive exposures will see growing demand from U.S. institutional investors this year, according to a survey of investment consultants.
Private equity topped the list, rising from sixth place the year before.
The survey, conducted in December and January by investment data analytics provider eVestmentAlliance and money manager consultant Casey, Quirk & Associates, asked 30 investment consultants with combined assets under advisement of $9.7 trillion where they expected clients to allocate money in 2012.
A report on the results, released Tuesday, predicted alternatives-related searches would remain “a key driver of consultant searches” in 2012, with 26% of all new or expanded mandates for the year likely to target hedge funds, private equity or real estate.
That points to a pickup in demand for alternatives, said Benjamin Olmstead, vice president of new product innovation with eVestmentAlliance, in an interview. However, this latest in a series of six annual surveys is the first to include detailed forecasts for each market segment's share of overall search activity, so a precise year-on-year comparison can't be made, Mr. Olmstead noted.
Emerging markets debt came in second, representing a surge in interest over the past year, Mr. Olmstead said.
While domestic equity and core or core-plus fixed income continue to dominate existing allocations, manager replacement activity is likely to account for well over half the searches focused on those market segments this year, according to the report.
On a scale that gives searches for new mandates greater weight than replacement searches, alternatives categories such as private equity, hedge funds, real estate and commodities dominated the list of “most-sought” asset classes forecast for 2012, noted Benjamin Phillips, a partner with Casey Quirk, in an interview.
Nearly 60% of consultants to pension plans, meanwhile, predict their clients will expand their passive exposure this year, nearly three times the proportion making that prediction for 2011.
Mr. Phillips said the latest survey showed a break between consultants to pension funds and those advising endowments and foundations. Those advising pension funds predicted a strong increase in interest in passive strategies, while consultants for endowments and foundations anticipate a strong pickup in demand for active strategies.
