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Over 85 per cent of investors plan to invest the same or more in private capital over next 12 months, says Preqin study

Alternative assets data, tools, and insights specialist Preqin, has published its H1 Investor Outlook for 2022, with represents the views of more than 350 LPs, interviewed in November 2021, investing across alternative assets — breaking down investor sentiment in the following categories: ESG, private equity, venture capital, private debt, hedge funds, real estate, infrastructure, and natural resources.

Alternative assets data, tools, and insights specialist Preqin, has published its H1 Investor Outlook for 2022, with represents the views of more than 350 LPs, interviewed in November 2021, investing across alternative assets — breaking down investor sentiment in the following categories: ESG, private equity, venture capital, private debt, hedge funds, real estate, infrastructure, and natural resources.

Across private capital, 86 per cent of investors said they plan to invest the same or more over the next 12 moths, while an average of 90 per cent of LPs globally said performance had met or exceeded expectations, compared with 72 per cent of hedge fund investors. 

While competition for assets, valuations, and rising interest rates top the list of investor concerns, more than a third (35 per cent) plan to invest more in private capital over the next 12 months, with a further 51 per cent expecting to invest the same amount, and just 14 per cent planning to invest less. 

Preqin first provided its Investor Outlook in 2008, and since then, has kept its finger on the pulse of what investors are thinking throughout the alternatives industry. In 2022, investors have come through the pandemic more committed than ever to their alternatives programs. Institutional investors value the diversification, high absolute, and risk-adjusted returns they get from their allocations to alternatives and these benefits have, historically at least, persisted during times of crisis, including both the Global Financial Crisis and Covid-19.  

Nearly three quarters (72 per cent) of investors believe fund managers are adopting ESG policies because of pressure from existing and prospective LPs, in line with previous years. However, there was a notable increase in the proportion of LPs seeing political pressure as a driver, which climbed from seventh most important factor to third. Crucially, investors do not see ESG as having a negative impact on performance, with 55 per cent saying an ESG focus has no impact. The 23 per cent who see an ESG focus as positive on returns is marginally higher than the 22 per cent who see a negative impact. 

In this year’s survey, at least 30 per cent of fund managers across all alternatives asset classes have an active ESG policy. Private equity leads the pack, at 43 per cent, followed by private debt and infrastructure, at 39 per cent. Hedge funds (30 per cent) trail the field for the second successive year.

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