Alts allocations by LPs to rise along with use of AI, survey reveals
Alternative assets remain a key component of the investment decisions of limited partners according to a new survey.
Almost all (93%) of respondents said they plan to either maintain or increase their allocations to alts in the next 12 months, with more than half falling in the ‘increase’ group with a slight rise compared to 2022’s survey.
Almost 9 in 10 of the global LPs and asset allocators polled by fintech firm Dynamo Software and Northfield Information Services indicated their intention to use fund managers for their investments in alternatives, up from around three quarters in 2022.
Perhaps wary of more volatile asset classes, the research also found that investors are pulling back from cryptocurrencies with just 3% considering allocations to the digital assets compared to 13% a year ago.
“The pullback in crypto is understandable given the rapidly changing regulatory environment, the failing of notable players and remaining questions about the market’s medium-term development,” observed Dynamo CEO Hank Boughner.
A key trend identified in the survey is interest in the secondaries market.
More than a third (36%) of respondents said they are considering allocations to secondaries, up 6 percentage points from last year.
“Over the past 10+ years, the secondaries market has been on an upward trajectory thanks to a range of trends from overall exposure to market perception,” said Boughner.
He said that LPs are choosing to alter their exposures by selling positions to other investors.
“The secondaries market has become more transparent and ‘liquid’ in the sense that active investors are looking to come into an existing GP fund, for example,” he said. “The ‘new’ LP can then take over the position, gaining the benefit of
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