Canadian institutional investors are seeking to further increase their overall allocations to alternative investment strategies, including real estate, private equity, infrastructure, private debt and hedge funds, according to a new study published by CIBC Mellon.
The report, “Race for Assets: Canada vs the World,” found that among the various alternative sub-asset classes, real estate (42 per cent) is most favoured among Canadian investors surveyed, followed by infrastructure (20 per cent), private equity (18.7 per cent), private debt / loans (17.9 per cent), and hedge fund investments (1.4 per cent). Private equity led the way in terms of satisfaction, with 47 per cent of respondents saying performance exceeded expectations and the remainder finding the class performing as expected.
“Alternatives continue to gain momentum among Canada’s institutional investors as they seek investments that can shelter their capital from short-term risks and market movements while also generating strong returns, though we are seeing Canadian investors becoming more particular about how they deploy their capital,” says Jon Lofto (pictured), Director, Alternatives, CIBC Mellon. “Canadian investors are seeking increased transparency through the adoption of new technologies, which suggests a growing need for advanced analytics and big data to support the decision-making process as well as a desire to deliver returns while considering environmental, social and governance (ESG) factors.”