Aviva's sixth real assets study covers 500 institutional investors, including corporate defined benefit and DC plans, public pensions, insurers and financial institutions, in the U.K., Europe, Asia-Pacific and North America with a collective $3.8 trillion under management.
Among corporate defined contribution plans, 69% expect to allocate more to real assets, a jump from 55% in the 2022 study. The percentage expecting to decrease allocations to illiquid asset classes fell to 6% from 29% in 2022.
And, although only 53% of those plans currently offer access to real assets via default funds, 45% of respondents expect participants to be able to self-select exposure to real assets funds in the future.
Among all types of investors surveyed, 64% cited diversification as a primary reason for allocating to real assets, up from 57% in 2022.
For institutional investors with real assets allocations, one-third of them hold 10% to 20% of their total portfolios. Real estate equity was still the most attractive, averaging 27% of real asset portfolios. The study also found infrastructure debt at 11% and infrastructure equity at 14% making up larger shares of real asset portfolios compared to previous years, with real estate debt at 11% and real estate long income at 12% also rising since 2022.
Another factor for some investors was real assets' contribution to sustainability goals. For 53% of institutional investors surveyed, improved financial performance is leading them to invest more in sustainable real assets. For the North American investors, performance was more important than impact, while European investors preferred the opposite, 58% compared to 49%.
Higher interest rates were a concern for 60% of the global investors, who also worried about a global recession. By region, 47% of North American investors worried most about liquidity; while political risk was a bigger concern in Europe and market volatility was seen as a bigger threat by APAC investors.
