Investments in alternative assets are set to rise over the next two years, driven mainly by the increased use of hedge funds, according to a Russell Investment Group survey.
The survey enlisted responses from 327 organisations worldwide, asking them about their use of private equity, real estate and hedge funds in investment portfolios.
In Australia, the percentage of investors using hedge funds climbed from 18 per cent in 2003 to 32 per cent in 2005. Growth was similar in other countries, but hedge funds proved to be most popular in Japan, with 59 per cent of respondents now using them.
In total, 5.2 per cent of funds are currently allocated to alternatives in Australia, with 13 per cent of this taken up by hedge funds.
Portfolio allocations to hedge funds is expected to increase over the next two years, with North America and Australia predicting an increase in allocations to 9.1 and 7.2 per cent respectively.
The report also confirmed Australian investors’ bias towards property. Real estate still dominated the region’s alternative allocations, standing at 57 per cent. However, unlike other regions, Australia was not forecasting an increase in its level of real estate investment.
“This year’s survey paints a clear picture — alternative investing will continue to grow at a strong pace worldwide, hedge funds will continue to garner the greatest share of increased commitments, and the smaller markets will increase their alternative investments significantly compared to more mature markets,” Russell Investment Group managing director Stephen Roberts said.
