DB plans to increase alternatives exposure, research shows

24 April 2014   Category: News, Global   By Asia Asset Management

Defined benefit (DB) pension plans will increase their proportion of investments in alternatives, including real estate and other real assets, over the next 12 months, according to research.

Boston-based global analytics firm Cerulli Associates’ survey of gatekeepers found that institutions were increasing allocations to non-correlated assets, such as alternatives, in the wake of global financial crises in order to achieve more consistent returns.

"The 2008 financial crisis left institutions in search of more consistent portfolio returns across different economic environments," said Michele Giuditta, associate director at Cerulli. "There is new thinking around portfolio construction, leading institutions to re-evaluate their models for governance, asset allocation, and implementation."

Cerulli added that as institutional investors took a more objective-based approach to portfolio construction, hedging and risk management allocations would become of increasing importance.