The 2019 Context Allocator Trends Report revealed strong demand for alternative investment strategies, with 72 percent of respondents noting they are optimistic about the industry and 97 percent planning to increase or maintain their net positions in alternatives by the end of the year. The report is based on responses from nearly 450 institutional allocators in attendance at Context Summits Miami 2019.
Ron Biscardi, co-founder and CEO of Context Capital Partners, commented, “Despite the doom and gloom headlines around the industry, our survey highlights that investors are not pulling back from hedge funds, but rather taking a more sophisticated approach to how they allocate capital. This helps explain that despite the industry experiencing $34.6 billion in net outflows in 2018, hedge fund managers who attended Context Summits Miami 2019 experienced $7 billion in inflows during the same time period. We are quite confident strong demand for alternative investments will continue, particularly in investment strategies that are uncorrelated with traditional markets.”
Additional key survey findings include:
- Increased Optimism for Better Market Performance in 2019: The majority (63 percent) of allocators believe the market in 2019 will perform better than in 2018, when the S&P 500 dropped by 6.24 percent.
- Allocators Prefer Emerging Managers: Allocators continued to show consistent support for emerging managers, with 57 percent saying they favor new managers, defined as those with less than a three-year track record or less than $300 million in assets under management, over more established managers. That figure tracks closely to the 60 percent of investors who had the same sentiment in 2018 and is a number that has remained remarkably steady over the past few years.
- Investors are Looking More Closely at ESG: While investors varied widely in how strongly ESG issues factored into their investment process, more than half of allocators (58 percent) said that they looked at ESG issues when evaluating strategies. By comparison, when asked in 2018, 51 percent of allocators indicated an intention to increase allocations to these funds and 38 percent said they already consider ESG or responsible investor factors as part of their investment strategy. This slight increase suggests that investors have placed a greater value on ESG and look at it as more than just a checking-the-box exercise.
- Geopolitical Risks Worry Allocators the Most: When ranking what topics keep them up at night, allocators agreed geopolitical risks worry them the most, followed by market volatility and the threat of trade wars. In contrast, allocators were less immediately concerned about climate change and the threat of military conflict.
The full survey results, along with an analysis of key findings, are available via the latest Context Allocator Trends Report at: https://contextsummits.com/resources/allocator-trends/.