Investors looking for bigger returns are increasingly turning to riskier but potentially more rewarding opportunities like real estate and hedge funds, according to BlackRock.
In a survey of 100 institutions released on Thursday, BlackRock found that nearly half planned on raising their exposure to real estate investments. About 40 percent were considering putting more money into so-called real assets, including infrastructure.
And roughly one-third planned to reduce their cash holdings, seeking better returns on their money elsewhere.
Traditional investments in stocks and bonds will continue, BlackRock found, but more exotic asset classes may yield better ways to fill out portfolios.
“Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets and rising correlation between stocks and bonds,†Robert Goldstein, the head of BlackRock’s institutional client business and BlackRock Solutions arm, said in a statement.
Meanwhile, investors â€" largely American ones â€" also planned to focus more on so-called alternative asset managers in hopes of finding higher yields, with nearly 30 percent of the surveyed institutions considering larger investments in hedge funds. Among American firms, that percentage was more than 40 percent.
Private equity firms should expect a smaller bump, with about one-third of respondents indicating that they will put money into the leveraged-buyout business. Institutions in Europe and the Middle East, as well as money managers with less than $20 billion in assets, said they planned to maintain their current level of investments in the business or even cut their exposures.
The survey holds special interest because of the firm conducting it: BlackRock, an undisputed behemoth of the money management world. The firm, which reports earnings on Thursday, oversees nearly $4.1 trillion in assets around the world on behalf of a variety of clients.
