Institutional 'alternatives' exposure doubles
EUROPE – Institutional investors are increasingly turning to alternative investments in an attempt to boost returns, claims joint research undertaken by Goldman Sachs and Frank Russell.
The report finds that since the last survey in 1999, the amount of funds committed by European investment houses to private equity has almost doubled from €13.4bn to €26.7bn.
Leveraged buyout funds attracted the largest share of funds going into private equity.
Moreover, the European respondents expect their strategic allocations to private equity to continue growing until at least 2003.
Hedge funds have also done well across Europe, accounting now for 3.7% of total assets invested by institutions, compared to just 1.7% two years ago. Of these, the report finds that the most favoured hedge fund strategies continue to be market neutral, multi-strategy and merger arbitrage.
Investing outside the home country or region continues to gain in popularity, says the report, with continental European respondents showing themselves to be more diversified internationally than their peers in the UK, having trimmed back their North American exposure in favour of other foreign markets and global fund commitments.
The joint research sought the views of 124 European investment institutions with €3bn or more under management. Of these, there were 93 respondents, representing 75%.
Of the 93, 51 invest in private equity, but only 14 have assets invested in hedge funds.