Chart of the week

Family offices to increase allocation to alternatives

This week’s chart looks at institution’s growing interest in alts; they expect to grow allocations to real estate, private debt and private equity.

April 14, 2023 | 2 minute read

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. 

  • Investment Company Institute, as of April 12, 2023.

  • Center for Retirement Research at Boston College.

  • Ocorian, as of April 12, 2023.

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