Frankfurt am Main, November 24 2016

Survey: Alternative Investments as White Knight?

Almost half, or no fewer than 44 percent, of the polled institutional investors are expecting no Brexit repercussions for continental Europe’s capital markets; 37 percent are, however, sceptical, and no less than 19 percent, even positive. These surprising findings emerged during a TED survey of around 100 institutional investors at a Universal-Investment conference on the future of institutional investment. When asked about ECB monetary policy, however, the respondents saw red, with 84 percent viewing it as the basis for the next financial crisis; this compares with just two thirds who shared this opinion in 2014. A further 83 percent regarded a change in the ECB’s interest-rate policy unlikely in the near future.

Keyfacts

Almost half the polled German institutional investors are expecting no Brexit repercussions for European capital markets

86 percent see ECB’s interest-rate policy as basis for the next financial crisis

Share of alternative investments continues to grow in the portfolios

“Given the low interest rate ecosystem, investments in stocks and alternatives are becoming increasingly popular among institutional investors,” says Universal-Investment CEO, Markus Neubauer. The trend is also mirrored in the real capital streams on Universal-Investment’s platform where this investor group has already invested €6 billion in real estate over the past few years, and structured a total of ca. €16 billion in other alternative investments over the same period. This corresponds to over 10 percent of the meanwhile €207 billion total volume of special funds.

When asked about their own investment strategies in alternative assets such as private equity, infrastructure and loans, four out of ten investors said they wanted to place 3 to 6 percent of their investments in this asset class in the future, while a further one in four wished to raise their alternative investment quotas to 9 to 12 percent, and just over one in ten to over 12 percent. In doing so, securitised and unsecuritised credits (loans / private debt) were slightly ahead of real estate and private equity / infrastructure; this contrasts sharply with hedge funds, however, which meanwhile barely play any role whatsoever.

The new RAIF (Reserved Alternative Investment Funds) vehicle is also boosting the appeal of finance centre Luxembourg. RAIF not only enables high flexibility but also, and notably, a very short issuance periods. The vast majority – 83 percent – was convinced that RAIF would strongly boost Luxembourg as a fund centre.

Loan funds very popular among German institutional investors

Source: Universal-Investment

Institutional investors also wrong-footed by US election results

The vast majority of institutional investors was also anticipating a different outcome to the US presidential elections. Only around one in ten of the respondents had been reckoning with Donald Trump as the new president beforehand; and off those, slightly more than a half predicted negative consequences for global capital markets.

About the survey: Universal-Investment polled around 100 institutional investors (i.e. pension funds and pension schemes, businesses, financial institutions, insurance companies and foundations) at an October 2016 conference. The survey was conducted using the TED method, directly at the conference. The investment professionals are amongst Germany’s largest investors, with a total of well over €400 billion under management.

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