EUROPE - Alternative investments might not be so 'alternative' after all, according to new research by the asset management division of US investment bank JP Morgan.
Following a Europe-wide study, the 282 surveyed institutional investors across 12 European countries, said they intend to invest a further €103.6bn (£69.7bn) in alternative assets in the next two to four years.
Intended levels of investment over the next two to four years are €27.2bn in real estate, €17.1bn in hedge funds, €16.3bn private equity, €14.5bn in infrastructure, while €28.4bn are planned to be put in ‘other' alternatives, such as for instance commodities and currency.
Overall allocation to alternatives has remained stable at around 13%, according to the survey.
Jens Schmitt, head of institutional business for Continental Europe at JPMorgan Asset Management, argues alternatives are highly attractive for pension funds because of their low correlation to other assets and the protection they give from inflation.
Schmitt added: "Our research has demonstrated that the real mainstream alternative asset class is what we refer to as "real assets". They include real estate, which is core in most portfolios today, and increasingly other physical assets such infrastructure, commodities and timber, which are being accepted into the mainstream."
Institutional investors remain divided about the potential risk attached to investing in hedge funds and private equity.
Though Schmitt said: "As hedge funds and private equity continue to assert their influence on a number of securities, traditional fund manager methods are being enhanced by hedge fund techniques; so even the most risk averse of investors will surely be effected by alternatives."
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
No comments yet