Investors Like Real Estate, Private Equity in First Half

Institutional investors at the start of the first half had mixed attitudes toward the alternative assets industry, according to a survey by Preqin, an alternatives data provider.

Sixty-five percent of investors held positive general perception of private equity, with only 6% expressing a negative perception. And 52% of investors had a positive view of real estate, and just 12% a negative one.

The balance tipped for hedge funds, with 38% of investors holding a negative view and 32% a positive one. It was worse for natural resources: 33% had a negative perception of the asset class, and 17% a positive perception.

The investor sentiment survey comprised 35% public and private pensions, 15% foundations and endowments, 10% insurers, 9% asset managers, 7% family offices, 6% funds of funds and 5% banks. Forty-two percent of institutional investors were located in North America, 35% in Europe, 15% in Asia and 8% in the rest of the world.

Preqin said the conflicting perceptions reflected differing performance between the asset classes.

Private equity and real estate have returned record amounts of capital to investors in recent years, it noted, leading 39% of real estate investors and 30% of private equity investors to feel their expectations had been exceeded, and only 11% and 6%, respectively, feeling their expectations had not been met.

In contrast, natural resources and hedge funds, challenged by difficult performance conditions over the past year, disappointed 62% and 49% of investors in these asset classes, respectively.

Allocation Trends

At present, 79% of institutional investors in the survey allocate to alternative assets, with 42% investing in three or more different asset classes. Only 5% of institutional investors currently invest in all alternative asset classes.