A survey released Tuesday by Morningstar and Barron’s indicates increased use of alternative investments among both advisors and institutional investors. In addition, alternatives are making up a larger proportion of portfolios, as well as being used in different vehicles.

Nadia Papagiannis, alternative investment strategist for Morningstar, said in a statement that “usage of alternatives continues to increase among both institutional investors and advisors, but the vehicles they’re using to implement these strategies are changing.” The percentages are substantial.

The 2010 Alternative Investment Survey of U.S. Institutions and Financial Advisors found that more than 70% of institutions expect to use alternatives to make up more than 10% of their portfolios in the next five years. More than one third (37%) expect that proportion to be greater than 25%; that’s up from 25% in 2009.

Alternatives were growing in use among investment advisors, as well; more than half expected clients’ alternative investments as a proportion of their portfolios to increase by more than 10% per year in the next five years.

More than a fifth of institutional investors—21%–said that long-short strategies are the largest part of their alternative allocation. That was also the most common strategy indicated for future investments. The second most common was managed futures; that investing vehicle was the most common strategy investment advisors said they planned to use in the future.

The data showed that institutional investors rely on traditional mutual funds and ETFs to provide more liquid alternative strategies, but still use hedge funds to access less liquid strategies like arbitrage, corporate actions and distressed securities. However, advisors are using liquid investment vehicles as a primary means of accessing all alternative strategies.

In a statement accompanying the study's release, Papagiannis  noted “We’ve seen $2.7 billion flow out of the hedge funds we track through the third quarter of this year, yet $17.3 billion has flowed into alternative mutual funds. Investors seem to want the best of both worlds when they can get it—the diversification benefits of alternative strategies with the liquidity and transparency of publicly traded vehicles. And the investment industry is responding to this demand. Alternative and commodity mutual funds accounted for 14% of all funds launched in 2010 and 20% of all ETFs.”