Survey Respondents Expect to Increase Their Asset Allocation to Alternative Investments over the Next Two to Three Years from 14% to 19% of Their Total Investment Portfolio
TACOMA, Wash.–(BUSINESS WIRE)– Institutional investors across the world, including pension funds, endowments, foundations and insurance providers, expect to re-commit to alternative investments despite the market stresses experienced during 2008 and 2009, according to the ninth global survey on alternative investing released today by Russell Investments.
The Russell Investments 2010 Global Survey on Alternative Investing found institutional investors expecting (on average) an increase of over a third (from 14% to 19%) in their allocation to alternatives over the next two to three years. Real estate, private equity and hedge funds remain the preferred alternative types, although commodities and infrastructure are expected to make meaningful gains, albeit from their current low allocations.
The survey also found that institutional investors have raised the bar in specific areas such as liquidity and transparency. A striking 84% of respondents have made (or plan to make) changes in their risk management approach, and nearly two-thirds are increasing the sophistication of their internal decision making and governance processes. At the same time, their awareness of the role alternative investments play in portfolio diversification and risk management has increased.
“Survey participants confirmed that alternative investing has survived the global financial crisis of 2008 and early 2009 and is poised for recovery, re-evaluation and increased allocations in the coming years. Alternatives have gained a solid reputation as portfolio-diversifiers and risk-mitigators, and they are expected to gain momentum even if the current global recovery were to falter,” said Janine Baldridge, head of global consulting and advisory services. “The Russell Investments 2010 Global Survey on Alternative Investing provides a valuable window into the practices and attitudes of institutional investors around the world at a pivotal time in the evolution of alternative investments.”
Since 1992, Russell has surveyed large tax-exempt institutions (public and corporate pension funds, endowments and foundations generally with assets of $1 billion or more) in North America, Europe, Japan and Australia to gauge their participation in and expectations for core alternative investing strategies. The high-level, global results, which were based this year on responses from and interviews with 119 organizations worldwide, are published in the comprehensive report, which presents data by investment category and includes detailed analysis regarding investment strategies, investment types and expectations for new investments over the next two years.
Headline global findings:
“Institutional investors responding to the Russell survey indicated that the events of the past two years have brought risk management and governance concerns into sharper focus,” said Julia Cormier, director, alternative investments. “They are doing more of what was working and also taking new steps to fill in the gaps. According to the survey, many institutional investors have adopted risk management systems that provide risk attribution by source. Still more have increased the frequency and depth of risk reporting to investment committees and management.”
About the Survey
Since the beginning of the survey in 1992, the Russell Investments Survey on Alternative Investing has been an important tool for institutions and respondents in alternative investments – becoming a barometer for industry standards and investment levels. The report is intended to help institutions and respondents broaden their knowledge about industry best practices, stay abreast of trends and structure their alternative investment commitments intelligently.
The survey, which targets the largest pension funds, foundations and endowments, is given in an objective format, and respondents are asked about their views and methodologies concerning alternative investments. The 2010 survey results are based on the detailed information provided by 119 organizations in North America, Europe, Australia and Japan. Many respondents also participated in longer qualitative interviews that captured evolving changes in philosophies, policies, allocations and attitudes. Information from other surveys represented here are views from respondents at that point in time.
About Russell Investments
Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. Over the course of its history, Russell’s innovations have come to define many of the practices that are standard in the investment world today, and have earned the company a reputation for excellence and leadership.
Through a unique combination of wide-ranging and interlinked businesses, Russell delivers financial products, services and advice. A pioneer, Russell began its strategic pension fund consulting business in 1969 and today is trusted by many well-known worldwide institutions for investment advice. The firm has $179 billion in assets under management (as of 3/31/10) in its mutual funds, retirement products, and institutional funds, and is well recognized for its depth of research and quality of manager selection. Russell offers a comprehensive range of implementation services that helps institutional clients maximize their assets. The Russell Indexes calculate over 50,000 benchmarks daily covering 65 countries and more than 10,000 securities.
Russell is headquartered in Tacoma, Washington, USA with offices in Amsterdam, Auckland, Chicago, Johannesburg, London, Melbourne, New York, Paris, San Francisco, Seoul, Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit us at http://www.russell.com.
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Source: Russell Investments