AsianInvestor’s annual survey of the largest institutional investors across Asia Pacific showcased strong appetite for exposure to global markets and alternative assets as well as an appreciation of active over passive investing.
It emerged respondents are as happy to invest directly and to co-invest with general partners and peers as they are to take a fund-of-funds approach, and they are ready to outsource more to external parties.
Further, they have had to reset their macro-economic assumptions as they face up to China’s growing economic influence. All of this is having a big impact on how they are constructing portfolios.
These were some of the conclusions that AsianInvestor has drawn from our annual survey based on our AI300 ranking (published in our July magazine).
Our survey, sponsored by Goldman Sachs Asset Management, received 100 responses from 95 institutions across 15 jurisdictions including central banks, sovereign wealth funds, pension funds, insurance firms, commercial banks and official institutions. For certain questions. asset owners were given the option to rank their responses in order of importance.
This year commercial banks made up a greater proportion of our respondents (34%) than in the past. To ensure we created an accurate picture of how Asia’s long-term institutions were allocating money, and to avoid a conservative distortion created by the predominance of liquidity providers, we present two sets of results: one including commercial banks (All) and one excluding them (non-banks). This also enables us to see how banks behave differently.
Based on our survey findings, we sought to dispel 10 myths about Asian asset owners, facts that market observers may have thought they knew about the region’s most sophisticated investor base, but didn’t.
Real estate is the favoured alternative asset
Not true. It may have been the case in the recent past, especially in Asia Pacific, but our survey saw just 13.1% of respondents (excluding banks) answer ‘real estate’ when asked to pick the most desirable alternative asset class.
The leading answer was infrastructure (31%), followed by private equity (19.7%). Even hedge funds (13.1%) scored as highly as property, which is quite a statement and presumably a reflection of the desire to diversify.
This appears to underline the region’s increasingly evolved and sophisticated asset allocation.
Interestingly, Asian asset owners are as likely to go for direct investment or to co-invest with GPs and peers as they are to take a more diversified fund-of-funds approach in alternatives, which is a change from last year and further indication of growing industry maturity.