Seventy-nine percent of institutional investors worldwide invest in at least one alternative asset class, according to Preqin’s second-half investor outlook.
Preqin, the alternatives data provider, said that private equity, hedge funds and real estate were the most targeted alternative asset classes, with more than half of investors surveyed having an allocation to each of them in their portfolios.
More than a third of investors also allocated to infrastructure and private debt, the report said.
Investors in alternative assets commonly cited diversification, high returns, reliable income streams and inflation-hedging characteristics as chief benefits of holding these allocations.
“Institutional investors allocate to alternative assets to diversify their portfolios and to achieve a broad range of other objectives,” Preqin’s chief executive, Mark O’Hare, said in a statement.
“The high absolute returns generated by private equity, hedge funds’ ability to reduce volatility, the reliable income generated by private debt and the inflation-hedging characteristics of real assets are just some of the attractions for sophisticated investors.”
Preqin’s second-half investor outlook was based on a survey of 460 institutional investors in alternative assets, 43% of which were located in North America, 31% in Europe, 22% in Asia and 4% in the rest of the world.
The survey found that investment in nearly all alternative asset classes was likely to increase over the coming year. In particular, 42% of investors in private equity, 38% in private debt, 36% in infrastructure and 26% in real estate planned to invest more capital in the next 12 months than they had in the previous year.
In contrast, one-third of hedge fund investors said they would invest less capital over the coming year, while 19% said they would invest more.