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54% Of All Institutional New Manager Hirings Going to Alternatives

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 Pensions & Investments reports that 54% of all new manager hirings since 2011 have gone to alternative investments including real estate.  Since 2011, $94.6 billion of alternative investment commitments have been made versus $79.6 billion to equities and fixed income.  Dwindling returns on fixed income products and the volatility of equities have been given as reasons.  These numbers are even more compelling given institutional disenchantment with dysfunctional private equity strategies.  Nevertheless, private equity, including venture capital has been able to raise $8.5 billion in the most recent quarter.

Many allocators are looking at hedge fund strategies such as market neutral or infrastructure or other conservative approaches to replace fixed income.  P&I reports that the old 60-40 split is dead.  

"Even so, the 60% equities/40% fixed-income allocation that was standard decades ago is long gone. Callan executives anticipate the typical public pension plan’s fixed-income allocation, for example, could start heading toward 20%, Mr. Kloepfer said. Many plans already are in the 30% to 20% range for fixed income.

Indeed, according to the Wilshire Trust Universe Comparison Service, the median allocation to alternatives by public plans with assets greater than $1 billion was 15.07% as of June 30, up from 1.81% as of June 30, 2003. During the same nine-year period, the median allocations to equities and fixed income dropped to 50.68% and 25.96%, respectively, from 56.8% and 31.35% respectively."

You can find more information here – http://bit.ly/OjC3g4

 

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