Investment intentions H1 21 | With Intelligence

Investment Intentions Update

Hedge funds and private equity the alternatives of choice

There is little doubt that US allocators have had their heads turned by private markets in recent years. A host of institutions and private wealth investors have been recalibrating their alternatives portfolios to larger allocations in private markets and our survey of 434 investors comprising 68 family offices, 242 foundation/endowments, 36 corporate pensions and 88 public pensions demonstrates this trend.

With Intelligence’s investor intentions data from April 2022 identified private equity (72%) and hedge funds (54%) as the alternative asset classes most likely to see inflows from US investors in the coming months. And, as in our December 2021 survey, With Intelligence’s Investor Intentions update suggests that investors believe that private equity and hedge funds have delivered strong performances during the recent upheaval and offer timely benefits in terms of risk management and niche opportunities.

Hedge funds ended 2021 by posting a 10.2% gain and their first net inflow in more than five years of $25bn. But, more than that, the change of sentiment from December 2021 to April 2022 is striking and all asset classes saw a drop in likelihood to invest, with the biggest in private equity and equities — down 10% and more — and the smallest decline in real estate at 3%.

Among investors, foundations/endowments are most enthused (76%) about private equity due to its capacity for disruptive, high-return impact as well as its record in seeking technological solutions to social issues like climate transition.