The ‘Invesco Global Sovereign Asset Management Study’ has noted a shift in asset allocation towards alternative investments by many sovereign investors. Sovereigns were seeking diversification, noting the volatility of equities, yield compression in treasuries, and greater correlation between equities and corporate bonds due to quantitative easing. It found 51 per cent increased new exposure to real estate relative to the portfolio and 29 per cent increased new exposure to private equity relative to the portfolio. Furthermore, all of the major alternative asset classes (real estate, private equity, infrastructure, hedge funds, and commodities) were projected to increase on a net respondent view basis when sovereigns compared their forecasted asset placements for 2014 with their 2013 actuals. The three-year trend appears to be structural, driven by strategic asset allocation, rather than a short-term shift due to tactical allocations.
245 Fairview Mall Drive, Suite 501, Toronto, ON M2J 4T1