EUROPE - Pension funds already committed to alternatives consider the asset class mainstream, but those not yet invested there have little interest, according to data from JPMorgan Asset Management.
Some 282 institutions were interviewed across 12 European countries showing the most popular alternative asset classes as hedge funds, private equity and real estate.
Jens Schmitt, head of institutional business, Continental Europe, JPMorgan Asset Management, said: “It is no wonder that given their protection from inflation, and low correlation to other assets, these alternatives offer highly attractive investments for pension funds.”
Respondents indicated probable total inflows of €27.2bn (£18.3bn) to real estate, €17.1bn (£11.5bn) to hedge funds and €16.3bn (£11bn) to private equity.
The survey showed, however, since 2003 investors were more divided with those remaining outside the alternative space even more cautious about investing there.
Those invested in alternatives reported a well diversified portfolio even within the asset class, choosing a range of vehicles and managers.
Schmitt added, however, that the alternative space had a knock on effect on the rest of the investment universe: “As hedge funds and private equity continue to assert their influence on a number of securities, traditional fund manager methods are being enhanced by hedge fund techniques; so even the most risk averse of investors will surely be affected by alternatives.”
Pension funds made up 85% of the investors interviewed, whose total assets under management reached €1.9trn (£1.3trn).
The survey was carried out in between June and July 2007.
In October the British Coal Staff Superannuation Scheme (BCSSS) announced it had doubled its allocation to alternative assets over the past year, with a plan to increase this to 20% of the fund's entire value.
This week's edition of Professional Pensions is out now.
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