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Context Capital Partners’ latest Context Allocator Trends Report, which is based on a survey of more than 400 institutional investors and family offices, has revealed strong demand for alternative investment strategies, with 70 per cent of respondents planning to increase their allocations to alternatives in 2018, and 29 per cent planning to maintain their current allocations.
The demand for alternative investments is supported by doubts over how long the current bull market can last, with 69 per cent of institutional allocators surveyed predicting that traditional equities and fixed income markets will underperform in 2018 when compared to 2017, and an additional 19 per cent predicting similar year-over-year performance. Investors looking for strategies that offer the potential for a differentiated return stream are now increasingly turning to cryptocurrencies and ESG or impact-related strategies, which are two of the fastest-growing sectors in the investment management industry. However, whereas 51 per cent of investors are planning allocations to ESG strategies in 2018, just 11 per cent are looking to add cryptocurrencies to their investment portfolios.
Ron Biscardi (pictured), co-founder and CEO of Context Capital Partners, says: “This survey was conducted immediately prior to a 10 per cent drop in equities prices and a spike in market volatility, so it’s prescient that many institutional allocators were already planning significant allocations to alternative investment strategies, which offer investors the potential for downside protection as well as asymmetric returns that are uncorrelated to traditional market risks. We believe this strong demand for alternatives will continue as market participants adjust to the uncertainty ahead.”