The vast majority of investors plan to increase their private assets exposures over the next 12 months amid a growing focus on the benefits of diversification, Schroders Institutional Investor Study 2021 has found.
The study, which surveyed 750 investors with $26.8 trillion in assets spanning 26 locations, found that 90 percent of investors are aiming to increase their allocations in one or more private assets classes over the coming year.
The growing importance of private assets was further emphasised by 47 percent of investors stating they will continue to diversify into alternatives and private markets and reduce their listed exposures, driven by the economic and financial impact of the pandemic. This was almost double the proportion of investors polled last year.
Over a third (37%) of investors also said that the impact of the pandemic had increased the importance of ESG considerations, with 54 percent citing that ESG strategies which have a 'benefit all stakeholders' principle at the heart of their investment process are the most appealing.
A resounding 80 percent of investors said the need to diversify portfolios was driving their private assets allocations, up from 78 percent a year ago and the 73 percent polled in 2019.
Track record and team stability, as well as the quality and transparency of reporting were the most important factors cited by investors when it came to selecting private assets managers. Investors in Latin America also placed a far greater emphasis on the ability to meet local requirements, compared with their global peers.
Georg Wunderlin, global head of private assets, Schroders Capital said:" Private markets are incredibly nuanced. They offer not only a wider range of risks, such as complexity- or illiquidity-based premia than many investors realise, but a huge number of private assets focused investment solutions can be tailored depending on investors' preferences. A growing number of our clients are taking advantage of this potential as we remain focused on working in partnership with them to meet their evolving needs amid the ongoing challenges of the pandemic and broader market uncertainties."
