| Property funds enjoy renaissance The alternative investment industry is expected to grow to more than USD24 trillion in assets by 2028 representing an increase of USD9 trillion in just six years.
While governments are keen to attract investment for large scale infrastructure and growth targets, so investors are drawn by the promise of outperformance and diversification.
No surprise then that research from fintech, Beacon Platform, finds 81 per cent of pension funds expecting to increase their allocations to hedge funds by 10 per cent or more, while 54 per cent of Sovereign Wealth and 49 per cent of Wealth Managers/Retail Investors say they will do the same.
However, while hedge funds are expected to enjoy growth, increases in allocations will be behind those of private equity, private debt, venture capital, infrastructure and real estate according to research from private equity firm KKR.
Hedge funds have long dominated alternative asset allocations, but as investors seek diversification, so other asset classes have come to the fore.
Looking at real estate, we bring you another survey this week from TIME Investments which reveals investment in property funds is set to rise, with over half (53 per cent) of UK wealth managers and financial advisers expecting to increase their clients’ allocation to direct property over the next 12 to 24 months,
Seventy per cent of those surveyed are targeting between 11 per cent and 20 per cent allocation to property as part of their clients’ portfolios.
Roger Skeldon, Head of Real Estate and Fund Manager at TIME Investments, tells us the outlook for UK property "is looking positive", arguing that there has been a positive reaction to the recent interest rate cut.
Meanwhile in private equity, Preqin reports that European fundraising reached EUR118 billion in the first half of 2024 signifying what could be a record year.
All this is good news for fund managers, but as we report this week, there are knock-on benefits for their service providers.
Preqin’s Service Providers in Alternatives 2024 report finds that service providers in the alternative assets industry are "well-positioned for further growth", particularly for those firms demonstrating "adaptability and innovation".
As competition hots up among alternative fund managers, their expectations from service providers evolves and sharpens. Preqin says third-party providers must be able to work with multiple asset classes, offer the latest technology and be forthcoming with views on market trends.
Nicholas Donato, Senior Vice President service providers at Preqin, says: "GPs told us that they value regularly hearing from service providers about their latest technology, client wins, or thought leadership. And even if a firm is not ready to make the switch now, it’s those service providers that prove their worth with a steady drip of market insights that earn a CFO’s attention once they are. It’s unsurprising then that law firms, auditors, fund administrators, and other service providers are significantly ramping up their marketing and business development efforts to earn that call."
If your service provider stands out from the crowd, why not nominate them for the Institutional Asset Manager Service Provider Awards 2024.
You can register your vote here.
We are also pleased to bring you a discount for a London-based responsible investment conference. This code, ETF20, will gain you a 20 per cent discount on tickets to attend RAO Global’s symposium on 21st November in London.
Gill Wadsworth, Editor, Institutional Asset Manager
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