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Alternative Market Briefing

Large institutional investors expect alternatives to rise but challenges loom

Thursday, November 30, 2017

Komfie Manalo, Opalesque Asia:

The number of large institutional investors expecting allocations to alternatives to increase over the next 12 months went up to 53% from 39% reported two years ago, a survey commissioned by BNY Mellon in October has found. The survey, conducted by FT Remark, interviewed senior executives from 450 large institutional investors to understand their strategy for allocating funds to alternative investments.

At the same time, BNY Mellon also predicts that alternative assets under management will surpass the current level of $7.7tln in 2017.

"Alternatives have been generating strong returns at a time when traditional investment classes have underperformed," said Chandresh Iyer, CEO, Alternative Investment Services, BNY Mellon. "No sector is immune from technology's transformative effects and fund managers need to become disrupters if they are going to thrive."

As demand for alternative investments is expected to increase next year, both investors and fund managers surveyed expect service and technology innovation to be the driving force in the industry.

When 100 alternatives fund managers in the survey were asked, all but two said they are feeling pressure to offer new operational solutions. Sixty-eight percent said that they will look to offer lower fees in the next 12 months, while 71% plan to offer greater transparency. "In the hunt for value in alternatives, investors are pushing for greater control ......................

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