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Laxman Pai, Opalesque Asia: Institutional investors across the world are shifting their interest from listed assets to private markets, said a new survey by BlackRock Inc.
For fresh allocations, private markets remain the favorite by a wide margin. Indeed, more than half (55%) of investors said they intend to up allocations to real assets and 46% to private equity.
Even if valuations are a concern in the private markets, asset classes like real estate and private equity are winning with institutional investors, revealed the 2020 Institutional Rebalancing Survey by asset manager Blackrock.
53% of global clients intend to increase allocations to private credit. Clients also intend to add to emerging market debt (31%) and securitized assets (31%), said the study which surveyed 271 institutional clients across the globe, representing over US$9.8 trillion in investible assets.
However, high valuations in private markets remain a constraint for some investors. More than a third (36%) of survey respondents cited the lack of attractive valuations as a challenge they faced as they pushed to meet their allocation targets for private markets in 2019.
The survey said that globally, 23% of clients plan to reduce cash balances, but there are significant regional differences.
As far as incorporating environmental, social and governance issues, the survey found 91 % of respondents from Europe, the Middle East, and Africa said they consider these issues in their investment process. By comparison, just 46% of U.S. and Canadian investors said the same.
Meanwhile, changes in fixed income allocations vary significantly by region, with Continental Europe decreasing allocations while the Americas, Asia, and the UK plan increases.
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