Asset Allocatorsí Attitude Towards Real Estate and Alternative Investment Classes

This paper presents information on institutional investorsí and investment consultantsí attitudes towards and their performance assumptions for the alternative asset classes, property, and the mainstream markets. It also gives estimates of UK institutional exposures to these asset classes. Much of the analysis is based on a series of interviews and the first section outlines the methodology in this respect. To set the context for the remainder of the paper, this is followed by a brief introduction to investment decision making in the institutional market, and after this, a brief discussion of the asset classes which investors and consultants see as distinct. The rest of the paper covers the substantive issues. Institutional investor exposures and trends are detailed. This draws on both the discussions with investors and consultants, information specially provided by the WM Company, and published reports and surveys. The prospective performance assumptions are outlined and the divergences from the historic outturns and between respondents explored. Finally, the paper considers the allocations implied by these views and contrasts them with those indicated by the historic data and current institutional allocations.