NEW YORK and BERLIN, June 7,
2016 /PRNewswire/ -- Institutional investors are
seeking to allocate more of their capital to alternative strategies
in a quest for strong returns in the low-interest-rate environment,
according to a new study from BNY Mellon.
The report, Split Decisions: Institutional investment in
alternative assets, produced by BNY Mellon in association with
FT Remark, found that among the various alternative asset classes,
private equity is most favored by institutional clients, accounting
for 37% of their exposure, followed by infrastructure (25%), real
estate (24%), and hedge funds (14%).
According to the study nearly two-thirds of investor respondents
said that alternatives had delivered returns of at least 12% last
year, while more than a quarter said the strategies had earned 15%
or more.
"Alternatives continue to gain share in portfolios, but
institutional investors are becoming more selective about where and
how they deploy their capital," said Frank
La Salla, CEO of Alternative Investment Services and
Structured Products at BNY Mellon. "As a result, they are demanding
greater transparency from their alternative fund managers. This
survey reinforces the notion that investors and fund managers alike
will need growing levels of support, insight and data to make
informed decisions."
Key findings from the report include:
- Thirty-nine percent of respondents say they will increase their
allocations to alternative investment types, while just 6% say they
will moderately decrease it.
- When it comes to private equity investments, 62% of respondents
say they will look for lower management fees and 55% say they will
request more transparency as they seek to optimize value.
- Distressed strategies are the most attractive when it comes to
hedge fund allocations, with 68% of investors currently having
exposure to them and 58% ranking them as one of the three most
attractive strategies for the coming 12 months.
- Fee pressure from investors is leading 78% of hedge fund
respondents to say that they will consider reducing their
management fees over the next 12 months.
- Emerging markets, on average, now make up 31% of institutional
investors' alternative allocations. APAC-based investors account
for the highest EM share at 54% of their alternative portfolios,
followed by investors in EMEA at 29% and the Americas at only
16%.
"The continued growth in alternative allocations will be
supported by a steady stream of new products and strategies as fund
managers cater to increasing amounts of capital headed toward
alternative assets," said Jamie
Lewin, managing director and head of manager research at BNY
Mellon Investment Management. "Innovation and adaptability will be
two key differentiators that determine which firms succeed in
capturing what's become an integral part of institutional
portfolios."
A BNY Mellon survey released in May, prepared in collaboration
with Preqin, showed that a significant percentage of
infrastructure, real estate and private equity managers expect
their assets under management to grow by at least 50% by the year
2020. That study found that global demographic and macro-economic
shifts are driving an unprecedented need for investment in real
assets such as transport facilities, communications networks,
housing and hospitals. In addition to institutional investors, the
report also suggests high net worth and retail investors are likely
to become a more important source of capital in the next five
years.
For the Spilt Decisions paper, BNY Mellon commissioned FT
Remark to survey 400 senior executives from institutional investors
around the world, including pension funds, investment managers and
insurance funds, to understand their approaches for allocating
capital to alternative investments. At the same time, FT Remark
also interviewed 50 hedge fund executives to gain insight into how
they are reacting to a changing regulatory environment and rising
demands from their institutional investor clients.
FT Remark
FT Remark produces bespoke research reports, surveying the thoughts
and opinions of key audience segments and then using these to form
the basis of multi-platform thought leadership campaigns. FT Remark
research is carried out by Remark, part of the Mergermarket Group,
and is distributed to the Financial Times audience via FT.com and
FT Live events.
BNY Mellon
BNY Mellon is a global investments company dedicated to helping its
clients manage and service their financial assets throughout the
investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries and more than 100 markets. As of March 31, 2016, BNY Mellon had $29.1 trillion in assets under custody and/or
administration, and $1.6 trillion in
assets under management. BNY Mellon can act as a single point of
contact for clients looking to create, trade, hold, manage,
service, distribute or restructure investments. BNY Mellon is the
corporate brand of The Bank of New York Mellon Corporation (NYSE:
BK). Learn more at www.bnymellon.com. Follow us on Twitter
@BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for
the latest company news.
Information containing any historical information, data or
analysis should not be taken as an indication or guarantee of any
future performance, analysis, forecast or prediction. Past
performance does not guarantee future results. The Information
should not be relied on and is not a substitute for the skill,
judgment and experience of the user, its management, employees,
advisors and/or clients when making investment and other business
decisions. None of the Information constitutes an offer to sell (or
a solicitation of an offer to buy), any security, financial product
or other investment vehicle or any trading strategy.
Contact:
Joseph F. Ailinger
Jr.
+1 617-722-7571
joe.ailinger@bnymellon.com
Ben Tanner
+1
212-635-8676
ben.tanner@bnymellon.com
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SOURCE BNY Mellon