Percent of respondents expected to increase alternatives allocations
Source: Ocorian, as of April 12, 2023.
- Despite the S&P’s notable rally over the past month, investors appear to remain skeptical as fund flows into U.S. stocks remain deeply negative.1
- There could be multiple reasons for investors’ hesitancy—the macroeconomic backdrop has grown increasingly uncertain; stocks remain very expensive, and bonds have seen renewed inflows within a higher-yield environment.
- At the same time, alternative investments have grown comparatively attractive, drawing increasing interest from institutional investors.
- State and local pension plans stepped up their allocation to alternative investments, which represented 34.4% of pension plans allocations in 2022 compared to 27.1% in the five-year period from 2015-2019 while family offices anticipate a similar push.2
- Participants in a survey of family offices expect to increase their allocations to real estate, private debt, and private equity investments over the next two years, in some cases by substantial amounts (10% or more) as the chart shows.3
- Amid the many outstanding macro questions that may continue to challenge traditional investments, institutional investors have begun turning toward lower- or uncorrelated sources of potential return.
