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Laxman Pai, Opalesque Asia: Institutional investors are most likely to make their biggest allocation shifts to the alternatives bucket, but even that is only an increase of 1.2%, said a study. More important, though, is where they plan to invest the 16.7% of assets allocated to alternatives.
According to the Natixis 2021 Institutional Outlook Survey, the plan for 2021 might as well be given the code name: "All private. All the time."
"Even as they rotate out of government bonds into investment-grade corporates, the pressure is on for institutional teams to generate the income they need to meet liabilities. With little chance of finding it within the realm of traditional fixed income, institutions are turning to alternative investments to fill the void," revealed the survey.
Private debt, infrastructure, and private equity all look to reap increased investment from institutions in 2021. Among those who already hold the asset classes in their portfolios, 90% intend to increase or maintain their holdings in private debt, 91% plan to do the same with infrastructure, and with private equity, the same is true for 88%.
So, while they appear willing to take on additional credit risk, institutions may see an even greater benefit in taking on the liquidity risk that comes with private investments. In truth, 44% say they are concerned with liquidity risk in private assets, but their actions show that given the likelihood that a low to negative interest rate environme...................... To view our full article Click here
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