alternatives

Risk Benefits Make Alternatives Attractive to GAMs

by

October 1, 2012

The June-July survey by Natixis GAM of 482 institutional investors in Asia, Europe, the Middle East, the US and the UK by Natixis reveals that an overwhelming a majority (91%) are increasing allocations to hedge funds, private equity and venture capital as a key to managing portfolio risk, with 89% favoring liquid alternatives such as global macro or long/short equity strategies, according to PI Online.

 

Furthermore, three in four global institutional investors (74%) have changed their approach to risk management over the past five years and now consider the use of alternative investments essential to diversify portfolio risk (76%) primarily due to market volatility.

 

The survey targeted investors with a median asset level of USD23 billion. Various sections of the research report are available on Natixis’ website, such as country by country breakdown of GAM survey results.

Other findings

  • Eight in 10 (80%) global institutional investors say market volatility is here to stay and a similar proportion (84%) believe that volatility creates investment opportunities. (SEE GRAPHIC)

 

  • The vast majority (81%) of global institutional investors say they find it difficult to mitigate the impact of market volatility on their portfolios.

 

  • On a global basis, three in four (74%) institutional investors find it difficult to adhere to asset allocation targets during periods of market volatility); one-third (32%) say they cannot effectively manage portfolio risk because of unpredictable market volatility. Only 22% of institutional investors in the U.S. claim say they cannot effectively manage portfolio risk because of unpredictable market volatility.

 

  • The No. 1 investment priority over the next 12 months selected by institutional investors across the globe is to use strategies that limit exposure to market volatility (15%); a full 31% of institutional investors in the UK say it is their top investment priority.  (Image Source: Natixis GAM)
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