Investors increase alternative asset portfolios due to market volatility

Investors are increasing the percentage of their portfolios dedicated to alternative assets as volatility hits mainstream markets.

One in four private investors have 20 per cent or more of their overall portfolio allocated to alternative assets such as private equity, infrastructure and real estate, according to research by Connection Capital.

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The survey of 120 investors found that 24 per cent of investors allocated 10 to 20 per cent of their portfolio to alternatives, while 30 per cent said the share was between five to 10 per cent. 

Connection Capital managing partner Claire Madden said: “Alternative assets are no longer a side show.

“Given the current challenging investment environment for traditional asset classes, a move towards higher allocations to alternatives is understandable for sophisticated private investors with the right risk profile.

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“20 per cent in alternatives might sound like quite a chunk but there is the possibility for tremendous diversification within the spectrum of alternatives.”

Data from Prequin published earlier this year showed that in June 2018 50 per cent of institutional investors allocated capital to three or more different types of alternative assets, up from 39 per cent in 2015.