Institutional investors planning to allocate more to private assets: survey

Close to a quarter (23 per cent) of institutional investors said they plan to reduce their cash balances, according to a new survey by BlackRock Inc.

For fresh allocations, private markets remain the favourite by a wide margin. Indeed, more than half (55 per cent) of investors said they intend to up allocations to real assets and 46 per cent to private equity.

However, high valuations in these areas remain a constraint for some investors. More than a third (36 per cent) of survey respondents cited the lack of attractive valuations as a challenge they faced as they pushed to meet their allocation targets for private markets in 2019.

Read: Why are institutional investors ramping up allocations to private equity?

As for fixed income, private credit is generating the most interest. Globally, 53 per cent of investors said they intend to raise their allocations to the asset class. Following that, 31 per cent said they intend to add to their holdings in emerging market debt and the same percentage said the same for securitized assets.

As far as incorporating environmental, social and governance issues, the survey found 91 per cent of respondents from Europe, the Middle East and Africa said they consider these issues in their investment process. By comparison, just 46 per cent of U.S. and Canadian investors said the same.

For North American investors, 8.3 per cent said they plan to increase their allocations to public equity, while 42.6 per cent said they plan to decrease it either slightly or significantly. About a third (33.3 per cent) said they intend to up their allocations to hedge funds, while 17.8 per cent said they plan to decrease them.

Read: Head to head: Do hedge funds make sense for Canadian pension plans?