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Alternative Market Briefing

Investors consider increasing alternative risk premia exposure significantly in 2019

Tuesday, April 02, 2019

Laxman Pai, Opalesque Asia:

Overall, interest in alternative risk premia strategies has tempered last year, likely due to stagnant performance in 2018 revelead a survey of institutional investors by JPMorgan Chase & Co.'s capital advisory group.

However, the institutional investor survey finds that investors outside EMEA (where risk premia is most highly utilized) plan to increase their exposure significantly in 2019, particularly in the private bank & pension segments.

Common reasons for investing in risk premia strategies have consistently included isolating risk premia exposures, low costs and liquidity. JP Morgan's prime services team surveyed 227 institutional investors with a combined total of $706 billion in hedge fund assets.

24% of respondents are invested in risk premia strategies as of 2018, down from 29% in 2017. However, 12% of respondents are considering allocating to risk premia in 2019.

As of 2018, consultants (46%) and pensions (42%) use risk premia strategies more than any other investor types. On the opposite end, only 8% of family offices and 13% of endowments & foundations currently allocate to risk premia strategies.

Of the respondents who have invested or will invest in alternative risk premia strategies, close to 90% view these products as a complement to their hedge fund investments. Less than 5% of respondents use alternative risk premia strategies to replace their hedge fund allocations.

Regionally, 21% of Asia ......................

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