Alternative assets have been winning larger allocations from institutions over the past year, as the pandemic has helped accelerate a pre-existing trend away from traditional investment strategies focusing on stocks and bonds.
Demand for equity funds may have peaked, as EFAMA reports that net inflows reached another record in the first quarter of 2021 on the back of economic recovery and vaccination efforts.
Meanwhile, institutional allocations toward private markets are booming, with the UK’s Border to Coast Pensions Partnership raising nearly GBP3 billion of extra commitments for its new Private Markets investment programme.
Russell Investments is among those focusing on the rise of private debt as an asset class, as investors hunt for income outside of government bonds. Private debt has surged due to the trillions of dollars in stimulus that were unleashed by central banks and governments, to mitigate the economic blow from the pandemic.
Meanwhile, the potential for inflation has motivated other investors to make inroads into new asset classes. Digital assets joined the mainstream investment world over the past year, with big names such as BlackRock, Ruffer, Tudor Investment Corporation, and One River buying into bitcoin. Bitcoin has been lauded as a hedge against inflation, beyond the purview of central banks and currency devaluations.
“As an investment case, bitcoin is very early stage and offers big potential, as its long-term correlation is low compared to traditional asset classes,” said asset managers at Crypto Finance Group this week.
Editor, Institutional Asset Manager