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Alternative Market Briefing

Cerulli finds that capricious markets and rock bottom yields play havoc with institutional portfolios

Wednesday, September 12, 2012

Beverly Chandler, Opalesque London: Latest research from Cerulli Associates in the The Cerulli Edge: Global Edition, September 2012 issue shows that 'capricious markets and rock-bottom yields are playing havoc with institutional investment portfolios’. However, investment managers are responding with product solutions designed to suit a range of risk profiles.

As an example, Cerulli quotes Japanese pension plan sponsors who are gravitating toward emerging markets and hedge funds to address the problem of escalating future benefit payments. The report says: "Although the average percentage of hedge funds in corporate plans is still low (4.89% as of March 2011), the true percentage is probably much higher as some Japanese hedge funds are classified as Japanese equities".

The report reminds global managers who want to target institutional-only business that scale is indispensable as institutional fees are approximately half of retail fees.

Looking west, Cerulli finds that in Europe, more than 90% of institutional investors expect to maintain or increase their allocation to hedge funds over the next few years. While UCITS funds are still the most popular investment approach, Cerulli expects a growing number of institutions to invest in hedge funds directly.

Commenting on other trends in the alternatives segment, Barbara Wall, noted that Infrastructure as an a......................

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