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Matthias Knab, Opalesque for New Managers: Institutional investors in Germany, Austria and Switzerland now hold almost a third of their portfolios in alternative investments, and they are more confident than ever in their own ability to manage them. But the 2026 edition of the BAI Investor Survey, published this month by the German Alternative Investment Association (Bundesverband Alternative Investments e.V., BAI), also shows a market that is consolidating rather than expanding, rewarding past performance over current conviction, and quietly reopening the door to hedge funds.
The survey, conducted in July and August 2026, covers 105 institutional investors from the DACH region with combined assets of around EUR 2.9 trillion. Pension institutions make up the largest group (34.3% of respondents), followed by insurers (24.8%), single family offices (13.3%), foundations and church investors (12.4%), professional pension schemes (Versorgungswerke, 11.4%), banks (6.7%) and corporate investors (4.8%). Almost nine in ten respondents (89.5%) are headquartered in Germany, 8.6% in Switzerland and 1.9% in Austria. The report is authored by Dr. Philipp Bunnenberg, Head of Alternative Markets at BAI, and co-authored by Dr. Florian Bucher.
Alternatives become the core allocation
On average, alternatives now account for 32.3% of the institutional portfolio, up from 30.3% a year ago. Weighted by assets under management, the figure is 33.7%, barely different - which, according to BAI, shows that regulation and strategic orientation, rather than sheer size, determine how much an investor allocates to the asset class.
The investor base has also matured. For the first time since the survey began in 2013, not a single respondent rated itself as a beginner (levels 1 and 2 on a six-point scale), while 72% describe their alternatives teams as expert or near-expert, an all-time high. Experience translates directly into portfolio structure: investors at level 3 hold on average 3.4 alternative asset classes and an 11.8% alternatives share, while those at level 6 hold 5.9 asset classes and 36.7% in alternatives. The median investor is invested in five alternative asset classes.
Infrastructure equity (84% of investors), corporate private equity (82%) and real estate equity (76%) remain the most widely held alternative asset classes, followed by corporate private debt (71%). Real estate equity is still the largest single allocation at 8.8% of the total portfolio (down from 9.3%), while corporate private equity rose from 6.1% to 7.3%. BAI's conclusion: investors are building out existing positions rather than expanding into new asset classes on a large scale.
Hedge funds are back
The most notable shift is on the liquid side. For the first time in years, the share of investors in hedge funds and liquid alternatives has risen markedly, from 15% to 21%, with 23% expected over the next twelve months. The average allocation across all investors more than doubled from 0.6% to 1.4%, and those who are invested hold an average of 7.0%, the third-highest allocation among invested LPs after real estate equity (12.2%) and corporate private equity (8.7%).
Hedge funds and liquid alternatives also nearly doubled their net allocation balance (the share of investors planning increases minus those planning reductions) to +33 percentage points, an improvement of 16 points year-on-year. Bonds moved from negative into positive territory at +7. Cryptocurrencies and tokenized assets, by contrast, remain irrelevant for institutions, with just 3% invested.
Infrastructure and private debt lead the allocation plans
Among existing investors, infrastructure debt (+40), corporate private debt (+40) and infrastructure equity (+38) form a tight leading group in net allocation balance, ahead of corporate private equity (+24). Half of all corporate private debt investors plan to increase their exposure.
Real estate remains the only clearly negative segment, with net balances of -22 for equity and -29 for debt. Both improved by 11 points, however, suggesting that the sector is finding a floor rather than deteriorating further.
Private debt: committing capital while confidence falls
The sentiment barometer tells a more nuanced story. Infrastructure equity (+1.28) and infrastructure debt (+0.91) are the only asset classes whose assessment of the current investment environment improved, both from already high levels. Corporate private debt saw the sharpest drop in the entire survey, falling 0.70 points from +0.92 to +0.22, while corporate private equity weakened by 0.28 points to +0.32. Real estate equity (-0.41) and real estate debt (-0.30) remain the only negatively rated asset classes.
For private debt, BAI points to a clear contradiction: investors are committing capital while their confidence in the market declines. The aggregate score masks two opposing camps - LPs already invested in corporate private debt rate the environment at +0.41, while those not invested rate it at -0.53, a gap of 0.94 points. The authors note this could reflect better knowledge and satisfaction with performance among existing investors, or simply a choice-supportive bias.
Performance ratings fell across the board. Every asset class lost ground compared with 2025. Infrastructure equity (+0.87), infrastructure debt (+0.85) and corporate private debt (+0.82) remain positive, but corporate private equity dropped 0.70 points from +0.76 to +0.06, effectively neutral. Real estate equity slid from positive into negative territory (-0.52), and real estate debt recorded the survey's lowest score at -0.77.
Capital follows performance more than outlook
One of the survey's most interesting findings is what actually drives allocation decisions. Current sentiment explains planned allocation changes reasonably well (r-squared of 0.70), but past performance explains them far better (r-squared of 0.94). Corporate private equity is the only asset class that breaks the pattern, with a planned net increase of 24 points despite a near-neutral performance score.
Primaries remain the backbone, secondaries are established
Investors plan to deploy around two-thirds (67%) of their private markets capital through primary fund commitments, with 15% going to secondaries and 18% to co-investments and direct investments. Closed-end funds remain the standard access route in every asset class. Evergreen structures are most established in real estate equity (33%), reflecting the long tradition of open-ended real estate special AIFs in Germany, and much less common in private equity (13%).
Where separately managed accounts are used, 76% of SMA investors work with a single manager, while 35% use multi-manager structures. Around half (49%) of private equity investors use secondaries; among them, 88% access GP-led transactions and 74% LP-led deals. Continuation vehicles are now firmly established, with 43% of secondaries investors using single-asset and 24% multi-asset vehicles - despite the ongoing debate about conflicts of interest in GP-led processes.
A negative home bias in German infrastructure
BAI also took a closer look at what it calls a "negative German home bias" in infrastructure. Investors rated the investment environment in eight infrastructure sectors both inside and outside Germany. The result is unambiguous: not one sector is rated better at home than abroad, with an average discount of around 0.4 points. Fibre networks show by far the largest gap (-0.71), while solar (-0.07) and wind (+0.06) are rated close to neutral in Germany despite moderately positive scores abroad. In other words, the sectors most central to Germany's energy and digital transition receive the weakest domestic ratings.
Policy offers only limited relief. 57% of respondents expect no effect at all from location-promoting legislation such as the Standortfördergesetz and the Fondsrisikobegrenzungsgesetz, and only 26% expect significantly more German private markets funds as a result. State-backed initiatives such as the special fund for infrastructure and climate neutrality and the Deutschlandfonds are viewed more favourably, with 70% expecting a positive impulse for domestic investment and 30% judging them insufficient due to a lack of projects, structures and a roadmap.
Europe in, North America split, emerging markets stalled
Regionally, Europe is the clear favourite: 70% of investors plan to increase their private markets allocation there, against 15% planning reductions, for a net balance of +55. DACH (+20) is notably more restrained. North America delivers the survey's most striking result, splitting investors into two equal camps of 40% planning increases and 40% planning reductions.
Emerging markets remain underrepresented: only a third of investors (33%) are invested, and just 3% plan to enter in the next twelve months. Growth is coming from existing EM investors deepening and diversifying their exposure. Southeast Asia (28%) and India (22%) lead, with India showing the fastest-growing investor base, while Africa and the Middle East stay marginal at 9% each.
Niche themes: natural capital and impact
Natural capital remains a niche, with 16% of LPs invested and an average allocation of 1.5% among them. Timberland (79%) and farmland (64%) dominate, and portfolio diversification (86%) is by far the main motivation. Impact investing strategies are pursued by 24% of investors, up from 22%. Among those not doing so, the main objections are fundamental rather than operational: 59% cite an unclear definition of impact investing and 50% doubt the expected financial returns, while a lack of recognition under the EU sustainable finance framework is cited by only 5%.
BAI itself acknowledges a possible self-selection bias, since participants respond to an invitation from an association representing the alternatives industry, meaning investors with little or no exposure to alternatives may be underrepresented.
The full report is available from the Bundesverband Alternative Investments (BAI).
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