European pension funds stick with alternatives
GLOBAL – European and North American pension funds remain committed to alternative investments, according to Goldman Sachs and Russell.
For the sixth global report on alternative investing by tax-exempt institutions, Goldman Sachs and Russell surveyed the largest pension funds, foundations and endowments worldwide.
The results of the biennial survey revealed commitments to private equity and real estate still high for investors in North America and Europe.
In Europe, 43% of those surveyed invest in private equity, committing 16 billion dollars. In real estate, 49% of respondents invested with 42 billion dollars committed. Institutions in all regions predicted their allocations to the two asset classes would rise over the next few years.
Allocations to hedge funds have risen considerably according to the report. Over the past two years, allocations more than doubled in Europe and Japan, and are predicted to continue rising swiftly. Commitments increased 65% in Europe. Worldwide commitments to hedge funds by these institutions is 22 billion dollars.
The survey also reveals performance of the asset classes to have been solid since the 2001 report, and expectations going forward remain optimistic. European respondents expect 11% for private equity, seven percent for hedge funds, and seven percent for real estate.
With regards to vehicles, fund of funds have become increasingly popular as investment vehicles for private equity and hedge fund allocations in all regions. In the US, respondents investing in fund of hedge funds increased from 29% in 2001 to 50% this year.
“It is clear from the 2003 survey results that alternative investments are an increasingly important part of institutional investment portfolios in markets around the world,” said Nigel O’Sullivan, managing director at Goldman Sachs International’s pension and insurance strategy group. “With each survey we discover institutions taking even greater advantage of the benefits provided by these investments.”
Over 320 organisations in North America, Europe, Australia and Japan responded to the survey.