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According to Preqin, in 2022, investors have come through the pandemic more committed than ever to their alternatives programs. Institutional investors value the diversification, high absolute, and riskadjusted returns they get from their allocations to alternatives and these benefits have, historically at least, persisted during times of crisis, including both the Global Financial Crisis and COVID-19.

Nearly three quarters (72%) of investors believe fund managers are adopting ESG policies because of pressure from existing and prospective LPs, in line with previous years. However, there was a notable increase in the proportion of LPs seeing political pressure as a driver, which climbed from seventh most important factor to third. Crucially, investors do not see ESG as having a negative impact on performance, with 55% saying an ESG focus has no impact.

The 23% who see an ESG focus as positive on returns is marginally higher than the 22% who see a negative impact. In this year's survey, at least 30% of fund managers across all alternatives asset classes have an active ESG policy. Private equity leads the pack, at 43%, followed by private debt and infrastructure, at 39%. Hedge funds (30%) trail the field for the second successive year.

David Lowery, Senior Vice President, Head of Research Insights at Preqin says: "Despite the uncertainty around us, investors, managers, and advisors continue to look for opportunities in the rapidly growing and evolving alternative assets industry. The pandemic that defined the past two years has proven a catalyst for taking a closer look at the value of human and natural capital - climate change and broader ESG concerns are no longer a niche but the norm."

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