Schroders Institutional Investor Study: Investors in Asia Pacific show growing appetite for private assets amid market uncertainties
The Schroders Institutional Investor Study 2019 found that 65% of institutional investors in Asia Pacific expect private assets to deliver higher returns and greater portfolio diversification, whilst 39% of them are also aiming for a steady income stream from private assets. The study, which surveyed 650 institutional investors including 175 investors from Asia, who collectively have approximately $25.4 trillion in assets, has identified a growing apprehension among investors amid a backdrop of increasing macroeconomic uncertainty.
Asia Pacific investors’ key reasons for private asset investing
Source: Schroders Institutional Investor Study 2019. Survey question: To what extent are the following factors reasons for you to invest in private assets?
Focus on private assets
Driving investors’ returns expectations is their continuing focus on private assets. 86% of institutional investors in Asia expect to raise (50%) or maintain (36%) their allocations to private assets over the next three years.
Across the private asset spectrum, private equity was viewed as the source of greatest potential returns, with 41% of Asia Pacific investors intending to increase their allocations to private equity, markedly ahead of private debt (23%), real estate (23%) and infrastructure equity (18%).
Investors in the region however cited liquidity and fee as the greatest challenges to investing in private assets, and also flagged high valuations as the primary concern when investing in the asset class.
David Seex, Head of Alternatives, Asia Pacific, Schroders, commented:
“Institutional investors in Asia Pacific are increasingly looking at private assets both as an alternative source of returns and as a way to diversify risk. This is not surprising given we are in a late cycle economy with peak equity valuations and low fixed income yields. The valuation of a private asset tends to reflect its own fundamentals more than what’s happening in markets which are highly sensitive to sentiments. So investors can reduce their capital market dependency and potentially achieve higher long term returns. As the private markets continue to mature, we can expect to see new investment strategies, wider access, and multi private asset solutions that can deliver a range of target outcomes for investors.”
“However, as private markets grow, they are also impacted by the greater availability of capital. Finding segments where capital supply has not overwhelmed the investment opportunity is key. At Schroders, we focus on private assets that represent value, and develop offerings that not only meet their investment objectives but also help address traditional barriers such as illiquidity. As a firm that prides itself on innovation, we are committed to creating intelligent private assets solutions that help investors achieve their long-term financial goals.”
Please visit www.schroders.com.hk/SIIS to learn more about the Schroders Institutional Investor Study.
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