Real estate and life settlements are the alternative asset classes set to benefit the most as professional investors review allocations, according to new research (1) from ManagingPartners Group (MPG), the international asset management group.
Nearly half (47%) of professional investors questioned(pension funds, family offices, insurers and wealth managers) by MPG across Switzerland, Germany, Italy, the UK and the US expect allocations to real estate to increase dramatically over the next three years while 45% believe allocations to life settlements will see major growth.
MPG’s research with wealth managers and institutional investors who are collectively responsible for £258 billion assets under management shows hedge funds will also see dramatic increases in allocations with 44% forecasting major shifts in allocations.
The study found less support for commodities and high-yield bonds. Around a third (33%) predict dramatic increases in allocations to commodities while 28% believe high-yield bonds will see dramatic growth in allocations.
The research for MPG, which currently manages two funds – the High Protection Fund investing in Life Settlements and the Vita Nova Hedge Fund – with a combined gross value of $500m found 10% of professional investors do not know which asset classes will see dramatic increases in allocations.
Its High Protection Fund is seeing strong demand for Life Settlements as a growing part of the alternative assets sector. It delivered net annualised returns of 9.27% in 2022 and attracted net inflows of $20 million. Life Settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value. They have little or no correlation to equites and bonds.
The High Protection Fund has returned 196.91% since it was launched in July 2009. It aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees.
Jeremy Leach, Chief Executive Officer of Managing Partners Group commented: “The alternatives sector is growing rapidly with assets under management (2) expected to expand to $23.2 trillion by 2026 amid increased interest from retail investors and HNW individuals. That is driving increased allocations to separate asset classes with real estate, life settlements and hedge funds set to be the biggest winners over the next three years.”
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