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Impact Investing

IPE special report May 2018

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German institutions turning from equities to alternatives – Universal survey

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German institutions do not see an end of the low-interest rate environment any time soon and are planning to up their exposures to alternatives, a survey by Universal Investment has found.

Among the 90 German institutions polled by the asset manager, 70% want to increase their exposure to alternatives, and 29% said they were looking at investments in private equity and loans.

In a similar survey last year, only one-fifth of respondents were looking into alternatives, while one-third planned to increase their equities quotas.

This year, the trend is reversed and “growing stronger”, Universal said.

Currently, the exposure to alternative investments is below 3% in the majority of portfolios of the surveyed institutions, which included Pensionskassen, Versorgungswerke, insurers, foundations and banks managing around €300bn in total assets.

Universal pointed out that nearly one-third of respondents wanted to up their quota by more than 300 basis points.

At the same time, the interest in real assets such as real estate and infrastructure remained strong, but only 31% said they wanted to increase investments in those segments compared with 43% last year.

All in all, the surveyed institutions remained pessimistic about the global economic outlook, with 78% saying the financial crisis is not over yet five years on.

More than 60% noted quantitative easing helped to buy time but did not solve structural problems, and they did not expect either the US Fed or the ECB to cut rates over the medium term.

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