Nearly nine in 10 (88 per cent) institutional investors say their perception of alternative assets has improved due to their strong performance during the Covid-19 pandemic, research from Managing Partners Group (MPG) has revealed.

Almost a quarter (23 per cent) said their attitude had become much more positive, while 65 per cent stated it had become slightly more positive.

The study, which was conducted amongst institutional investors across Switzerland, Germany, Italy and the UK, also found that 68 per cent of respondents said the funds they help to manage have increased their allocation to alternatives over the past 12 months.

Of those how had observed increased allocation to alternatives, 11 per cent stated that it had increased dramatically.

The trend looks set to continue, with 63 per cent of those surveyed saying their allocations to alternatives would increase in the next 12 months, while 16 per cent revealed they planned to dramatically increase their allocations.

When asked why investors expect to invest more in alternatives, the top reason given by respondents was that they can provide a hedge against inflation.

This was closely followed by alternatives being able to provide an attractive yield and offering diversification benefits.

The fourth reason given was providing strong growth in valuations and the fifth was lower volatility.

Investors noted that alternatives rely less on broad market trends and more on the strength of each specific investment, and can therefore potentially reduce the overall risk within a portfolio.

“The Covid-19 pandemic looks like it has fundamentally changed professional investors opinions of alternatives and the benefits of these asset classes,” commented MPG chief executive officer, Jeremy Leach.

“It’s helped them to not only be seen in a different light, as they can provide a hedge against inflation as well as an attractive yield but has driven up allocations in the last six months. And this trend looks set to continue, with investors increasing their allocation to alternatives in the next 12 months.”

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