Institutional Investors Embrace Illiquid Assets; 80% of New Fund Launches In Energy Space

Institutional investors are increasingly turning to illiquid assets and active management strategies to combat macro-economic trends, anticipated market volatility and divergent monetary policy, according to a new survey by BlackRock.

BlackRock polled 174 of its largest institutional clients, which together represent more than $6.6 trillion in assets (public pension funds (25%), corporate pension funds (34%), official institutions (1%), insurers (25%), investment managers (6%), endowments and foundations (7%), and others (4%)), about their asset allocation plans following the recent market volatility. The survey found that investors are increasingly embracing illiquid assets, including private credit and real assets, as a way to meet their long-dated liabilities, rather than the traditional assets classes of stock and bonds.

It seems that the recent market volatility is driving a repricing of assets globally, allocations to equities appear to be decreasing while institutions are anticipating modest reductions to their fixed income portfolios. What's more, when asked how they plan to manage their equity exposures, 25% of respondents to BlackRock's survey said they planned on increasing their allocations to active managers. In comparison, only 16% of the sample was looking to increase index-based allocations. The largest increase in interest for institutional investors is long-dated illiquid strategies. Over half of the respondents indicated an increased allocation to private credit, followed closely by real assets (+49%), real estate (47%), and private equity (39%). Broadly speaking, the respondents to BlackRock's survey expressed demand for the return premia offered by illiquid assets.
Demand for illiquid assets in increasing
"Over the past 12 to 18 months we’ve seen the majority of the new fund launches we’re working on are focused on the credit space. Whether it’s direct lending or buying distressed companies," said Michael Minces founder of Blue River Partners, one of the US's largest compliance firms, in a telephone interview earlier this week.  He continued:

SORRY!

This content is exclusively for paying members.

If you are subscribed and having an account error please clear cache and cookies if that does not work email support@valuewalk.com or click chat.


X
Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

What’s missing today for many investors is real, straightforward advice.

Especially when it comes to Value Investing and Hedge Funds. 💵

That’s what makes ValueWalk Premium different. Some would say we’re “unusual.”

Our subscribers look forward to clear, easy-to-understand information they can act on.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers

0