The election of Donald J. Trump as the next U.S. president has not changed economic or market expectations enough to slow the migration to illiquid assets by institutional asset owners searching for investment returns.
But it does appear to have pushed some investors to begin research into considering inflation-sensitive assets.
“We've seen investors stay the course. (Pension funds) are long-term investors that are very focused on their liability streams and their funded status. So they have investment policies built for the long term,” said Josh Levine, head of alternatives specialists for the Americas at BlackRock Inc.
Mr. Levine said the results of a survey of BlackRock's institutional clients are being compiled and will be released in January 2017, but he foresees institutional appetite for alternative assets will continue to grow.
A prior survey last January indicated a net 50% of BlackRock's clients would increase allocations to private credit, while a net 49%, 38% and 30% of respondents said they would increase allocations to real assets, real estate and private equity respectively in 2016.
That said, the BlackRock managing director noted he's seeing clients interested in exploring assets that are sensitive to inflation. “They're beginning to research some themes,” Mr. Levine said. “But we're in the first inning on that.”
In October, results of the third-quarter endowment and foundation poll by Boston-based investment consultant NEPC LLC indicated 43% of respondents would be increasing allocations to private equity while 53% would maintain their current exposure. Only 4% of respondents planned on a decrease.
“Investors have been going more into private markets to achieve returns. I don't think you're going to see that changing,” said Catherine M. Konicki, a partner and head of the endowment and foundation practice at NEPC in a phone interview. She added that because the lifespan of most private market investments averages 10 to 12 years, most investments in illiquid assets will outlast any short-term market volatility caused by a presidential administration of four to eight years.