Private equity and infrastructure investment set for boom

Research has suggested that alternative investments look set to rise.
By Paul Walsh
More than 80% of institutional investors expect investor allocations to alternative assets to increase within five years according to new research from Northern Trust.

Private equity and infrastructure are set to receive the highest new allocations according to around 50 Nordic institutional investors surveyed at a recent event in Stockholm.

“In the current low growth, low interest rate environment, alternative investments play an increasingly important role for investors looking for higher yield and lower volatility,” said Paul Cutts, head of alternative investment services for Northern Trust Global Fund Services across EMEA.

“This survey confirms that institutional investors are expecting to allocate more to alternative investment funds over the next five years.”

The results concur with a previous study conducted by BNY Mellon at the beginning of June that concluded that private equity is the most sought after alternative investment strategy, accounting for 37% of investors’ alternative exposure.

Additional results from the survey identified the importance of environmental, social and governance (ESG) factors within the investment process with nearly half of respondents considering it “significant” while 26% of participants consider that ESG factors could “make or break” a deal.

“ESG considerations are naturally linked to infrastructure investments,” said Mamadou-Abou Sarr, global head of ESG investing at Northern Trust Asset Management.