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Bailey McCann, Opalesque New York:

German institutions have more cash on hand these days as fewer traditional investments are providing enough yield to justify large asset allocations. This is leading more of those institutions to consider an allocation to alternatives. However, institutions may find that they are boxed out of the highest returning strategies due to regulatory constraints. Marcus Storr Head of Hedge Funds at Germany-based FERI sat down with Opalesque TV to explain how German allocators have changed their tune on alternatives, and how regulation has had an impact.

FERI, with $27 billion in assets under management is the largest investment allocator in Germany. The firm has approximately $3 billion of that allocated to alternative investment strategies.

Storr says that there is mounting pressure on German institutions to find opportunities - "the pressure to find yield is in the front of everyone's mind," he says. He cites weakness in equities as well as the negative interest rate environment which has essentially removed all yield from German Bunds. "There's a certain dynamic now, where people are increasing their allocations to alternatives and UCITS," he adds. "This is irrespective of the category they are in as investors because they simply have cash to allocate."

Even with that trend in place, the average allocation a German institution migh......................

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