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. Access all of our content on including years of timeless investment news and in depth analysis for only a few dollars a month by signing up here while also supporting quality content and journalism, or learn more about our premium content here

If you are subscribed and having an account error please clear cache and then cookies if that does not work email support@valuewalk.com and we will get back to you as quick as humanly possible


Saved Articles
X
TextTExtLInkTextTExtLInk

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.

ENDS TONIGHT!

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 2/29/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others

 

0