More Interest In Alternative Investments

Date: Monday, October 1, 2007
Author: Jonathan Ratner, Financial Post

Alternative investments such as hedge funds, private equity and real estate should see more interest in the next few years if a survey from Citigroup proves correct.

The firm asked roughly 50 chief investment officers and pension fund managers that oversee US$1-trillion in assets about their plans, and about 85% of the managers said they will boost their alternative investment allocation during the next three years.

In fact, pension funds will dedicate nearly 20% of their assets to alternative investments within three years, up from roughly 14% today, Citigroup analyst Prashant Bhatia said in a research note. This works out to an additional US$1.2-trillion. Where will it all go? US$400-billion is expected to go to private equity, US$370-billion into real estate, US$290-billion in hedge funds and US$160-billion into other categories like commodities.

Who will capitalize most on all this growth? Mr. Bhatia says the Blackstone Group is ranked as the top destination in both the U.S. and overall for pension fund managers to put their money.