EUROPE - European pension funds are shunning cash in favour of riskier alternative investments, a survey shows.
Invesco's tenth annual European Institutional Asset Management Survey - which analysed the asset allocation strategies of 121 investors - found institutional investors were increasingly seeking diversification opportunities in real estate, hedge funds and private equity.
In total, alternative investments formed 11.7% of respondents' portfolios. Investment in real estate was particularly strong, with 6.6% of total assets invested in the asset class - an eight-year high.
Invesco Real Estate head of product management Simon Redman said the growing appetite for alternatives reflected a "reversion to trend" for institutional investors.
"There is a sense of a return to normality and investors appear resolute about resuming from where they were before the traumas and dramas inflicted by the financial meltdown," Redman said.
He added: "The economic crisis dented confidence in alternatives, but European institutional investors seem to have embraced the sector once again. Seemingly institutional investors are reasserting their belief in the low correlation of alternatives to the mainstream asset classes."
This EIAMS received responses from 121 investors from 25 countries, with total assets under management of €333bn ($441bn). More than half the funds were small (less than €1bn), 14 were large (more than €5bn) and 38 were in between.
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