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Alternative Market Briefing

Institutional investors overhauling their portfolios and cutting costs

Tuesday, September 18, 2018

Laxman Pai, Opalesque Asia:

A new survey of 485 investors with assets approaching $8tn from investment consultant bfinance says asset owners are shaking up their portfolios to meet their return targets, adding more alternative and illiquid investments.

The survey finds that the investors are adding new strategies, investing more in private markets and cutting overall costs.

"Although the average investor has transitioned towards a more complex portfolio, featuring greater use of non-traditional (and typically more costly) asset classes, they have achieved savings which more than outweigh those additional expenses. As a result, asset allocators' average costs have fallen rather than risen over a three-year period," the survey pointed out.

Among those who participated in the study, 66% have added a new asset class to the portfolio, led by private debt, infrastructure, real estate, emerging market equity and alternative risk premia. An additional 9% of respondents plan to do so imminently.

According to the study, a total of 49% have increased their allocations to private markets, although nearly half of investors are currently underweight versus their allocation target for private markets, citing obstacles such as slower-than-expected capital calls and lack of appropriate opportunities.

The survey found that staffing costs and staff numbers are up, although only 19% of investors have brought more asset management in house; teams are grappling with increasingl......................

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