LP Survey Says: Alt Investment Exposure Expected to Rise

Another week, another survey suggesting that institutional investors plan to increase their exposure to private equity.

This one comes from Russell Investments, which finds:

Survey respondents in North America expect the current share of private equity in their total portfolios, currently averaging 4.3%, to increase to 6.8% in 2012. Expectations for 2012 are not as robust in either Europe (3.7% share expected) or Japan (2.5%). In Australia, private equity allocations were reported at 3.5% for 2009, with little increase expected in 2012.

Respondants also reported expected increases to other forms of alternative assets, including hedge funds, real estate and infrastructure. No mention of venture capital, although it may have been included in the “private equity” category (it’s not mentioned at all in the full survey, which we’re not allowed to post).

Russell suggests that the alternative investment increases are partially explained by a reverse denominator effect, in which rising equity market values have pushed down alternative exposure percentages (albeit not hard dollars). It adds that the increases will come out of public equity allocations, which are expected to drop 5% over the next couple of years.

Survey respondants included 119 firms that manage a total of $1.3 trillion in assets (43% manage between $1b-$5b).