Institutional investors are seeking to allocate more of their capital to alternative strategies, including real estate, in a quest for strong returns in the low interest rate environment, according to a new study from BNY Mellon.
The report, Split Decisions: Institutional Investment in Alternative Assets, produced by BNY Mellon in association with FT Remark, found that among the various alternative asset classes, private equity is most favoured by institutional clients, accounting for 37 percent of their exposure, followed by infrastructure, real estate and hedge funds.
According to the study, nearly two-thirds of investor respondents said that alternatives had delivered returns of at least 12 percent last year, while more than a quarter said the strategies had earned 15 percent or more.
"Alternatives continue to gain share in portfolios, but institutional investors are becoming more selective about where and how they deploy their capital," said Frank La Salla, CEO of alternative investment services and structured products at BNY Mellon.
"As a result, they are demanding greater transparency from their alternative fund managers. This survey reinforces the notion that investors and fund managers alike will need growing levels of support, insight and data to make informed decisions."
