Podcast Center
Video Center
Webcasts
Resource Center
Events
January 21, 2014 at 08:33 AM
As correlation betweed stocks and bonds increases, major institutional investors around the world are looking to alternative investments to “buffer” their portfolios, according to a survey released last week by BlackRock. They’re showing a preference for real estate and real assets.
Forty-nine percent of institutions surveyed said they expected to increase their real estate allocation this year, and more than 40% said they would increase their investment in real assets.
At the same time, about one-third of respondents intended to reduce their cash holdings in 2014.
BlackRock surveyed some 100 institutional investors in the Americas, Europe-Middle East-Africa and Asia-Pacific markets, including corporate and private pension funds, insurers, investment managers and government entities. These investors represent a total of more than $6 trillion in assets under management, with an average AUM of $70 billion.
“Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets and rising correlation between stocks and bonds,” Robert Goldstein, head of BlackRock’s institutional client business and BlackRock Solutions, said in a statement.
“While core, income producing investments in developed markets are still in favor because of their liquidity and safe cash flows, we anticipate that institutions looking for income-producing alternatives will turn their attention to more opportunistic real estate investments outside their home markets.”
Goldstein also noted growing interest in infrastructure debt, which can potentially offer institutions high fixed yields, with stable cash flows and long duration.
Within the alternatives category, nearly 30% of institutions surveyed intended to increase their hedge allocations this year. In the Americas, more than 40% of institutions were likely to do so, and none were planning a decrease.
