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Alternative Market Briefing

Despite COVID-19 crisis, investors stick with alternative allocation plans

Thursday, August 27, 2020

Laxman Pai, Opalesque Asia:

COVID-19 has only had a limited impact on investors' allocation plans, as they remain satisfied with the performance, although they expect a negative impact on returns in the future, said Preqin.

Despite concerns that institutions may need to curtail their alternatives commitments to avoid being exposed to the denominator effect, the majority (63%) of those interviewed by Preqin do not plan to change their investment level in response to the COVID-19 crisis.

In fact, 26% of surveyed investors expect to invest slightly more in alternatives as a result of the pandemic, said Preqin's Investor Update: Alternative Assets, H2 2020.

Confidence is largely due to robust performance: alternatives have generally delivered the returns that investors expected over the past 12 months, and the industry has a good track record of performing well during downturns. But investors do expect that the pandemic will reduce returns from their alternatives investments.

Over a third of investors (35%) said they were anticipating a moderate decrease in returns over the next 12 months, a higher proportion than those that believe returns will stay the same (30%) or moderately increase (26%).

According to the report, most investors are satisfied with their returns over the last 12 months. In private equity, 72% of investors surveyed say returns have met their expectations. In private debt, infrastructure and real estate, 74%, 72% and 66% of investors r......................

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