Survey: Allocations to Alternative Assets, Importance of ESG Set to Rise

Jul 11 2016 | 10:44pm ET

Investors will boost allocations to alternative investments within the next five years, according to a new survey from financial services giant Northern Trust, and increase their focus on ESG factors in the investment process.

The survey, which took place at an event hosted by the company in Stockholm and polled around 50 institutional investors from the Nordic region, showed that more than 80% expect allocations to alternative assets to increase within the next five years, with private equity and infrastructure to receive the highest proportion of the new capital.

The respondents included including some of the largest and most sophisticated asset owners in the world, noted Northern Trust, and were also surveyed for their perspectives on the evolving role of alternative investments.

The investors also expect an increased focus on environmental, social, and governance (ESG) factors within the investment process over the next five years, with nearly 50% believing that it will be of significant importance and more than 25% saying ESG credentials could “make or break” a deal.

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

Founded in Chicago in 1889, Northern Trust Corporation is a provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. The company offers a full spectrum of alternative assets, including hedge, private equity, real estate, infrastructure and debt strategies.

As of December 31, Northern Trust had approximately $450 billion in alternative assets under administration on behalf of asset managers and approximately $531 billion in alternative assets for institutional investors, globally.

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