How and when should institutional investors use alternative investments, known as alts? Chief Investment Officer’s upcoming webinar will explore this key question, at a time when alts are increasing as an asset class in institutional portfolios. You can register for this event here.
Part of our “Allocator Insights” series, the alts session—slated for next Tuesday, June 15, at 2 p.m. Eastern—will delve into what makes the most sense for the long term and what the best strategies are for choosing alts. We’ll also examine and test the viability of various strategies, from hedge funds to private equity, real estate to commodities.
On hand to discuss this fascinating topic are three top-rate panelists: Jeff Lewis, staff vice president of retirement investments for FedEx; Richard Sega, the global chief investment strategist of Conning; and John Bowman, senior managing director for the CAIA Association. Larry Light, CIO’s markets editor, will moderate the talk.
Institutional investors are embracing alts in a major way: 86% of them now have money in alternative investments. What’s more, of those, two-thirds plan to increase their allocations this year.
That’s the finding of a recent survey of pension, endowment, insurance, and other big investors, as well as consultants, done by Nuveen, the investment manager for TIAA. The catalyst for this trend is the pandemic, the study stated, contending that the “crisis has brought some new approaches to the daily work of investing, including the due diligence process.”
For US pension plans, the share of alts expanded to 27% of portfolios last year, from just 7% in 2001, according to CAIA.
Alts are a diverse bunch, embracing everything from commodities to shopping centers. What are the most popular among the items on the alts buffet? Real estate, cited by 80% of the 700 Nuveen survey respondents, followed by 70% who are invested in private equity and 63% in infrastructure. More than half (55%) of alternatives investors said they plan to make a strategic shift away from public to private markets in the next 12 months.
Allocators are increasingly investing in alts without the use of outside managers. They are buying real estate and taking private equity (PE) stakes themselves, according to the survey, conducted late last year.