German institutional investors’ alternatives allocation remains at around 3% despite expectations in the industry that it was set to grow, according to a Feri EuroRating Services survey.

In Feri’s 2013 survey, institutional investors planned to increase private equity investments by almost 500 basis points (from 1.3%) and hedge funds by more than 300bps (from 0.4%), while maintaining exposure to commodities at 0.3% by 2016.

However, the 2015 survey – canvassing nearly 130 institutional investors, with €720bn in combined assets – showed that overall exposure to alternatives remained at 3%.

Similarly, the average equities allocation stayed at around 6%, roughly the same level as in 2009.

Feri observed that those investors enjoying more regulatory leeway in their investments, including many pension providers, made more significant adjustments to their risk portfolios.

“Pension providers have increased the share of equities in their portfolios from 11% to 19% since 2009 and decreased the share of bonds from 73% to 59%,” it added.

Investors with stricter investment limits, it added, did not have that option, but they are planning to increase their exposure to non-investment-grade bonds by 25% over the next three years, it said.

Overall, the average allocation to bonds remains very high, at 80%, Feri said.

However, Christian Michel, director at Feri EuroRating Services, predicted a “significant change” in the German market, as typical covered-bond instruments such as Schuldscheine, Namenspapiere or Pfandbriefe were “going out of fashion”, while corporates “increase in importance each year”.

This increased demand for corporates was also evident when preliminary results of the study were released in January

As for real estate, Feri said the asset class remained “under-represented” at 6.4%, almost the same average allocation as in 2011.

“The low growth in the segment of real estate investments is less the result of slow demand and more of limited availability,” Feri said.