Rebalancing allocations to alternatives

More than 80 percent of institutional investors surveyed at a recent Northern Trust event in Stockholm expect investor allocations to alternative assets to increase within the next five years. Private equity and infrastructure will receive the highest new allocations, they indicated.

“In the current low growth, low interest rate environment, alternative investments play an increasingly important role for investors looking for higher yield and lower volatility,” said Paul Cutts, head of Alternative Investment Services for Northern Trust Global Fund Services across Europe, Middle East and Africa (EMEA). “This survey confirms that institutional investors are expecting to allocate more to alternative investment funds over the next five years.”

Respondents also expect an increased focus on environmental, social, and governance (ESG) factors within the investment process over the next five years.

“ESG considerations are naturally linked to infrastructure investments,” said Mamadou-Abou Sarr, global head of ESG investing at Northern Trust Asset Management. “At Northern Trust we recognize the importance of ESG and have more than 25 years of experience managing socially responsible portfolios. As of Q1, 2016, we manage approximately US$57.9 billion in responsible investment portfolios, helping investors to automate and simplify the oversight process.”