The firm found two out of three institutional investors (67%) believe the level of volatility in markets will rise this year, with 6% predicting a dramatic increase.

Carne Group commissioned Pureprofile to interview 201 investors working for pension funds, family offices, wealth managers, insurance asset managers and consultants across the UK and continental Europe. Those taking part had a total of $1.7trn under management and were spoken to in December 2023 or January 2024.

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The researchers also found that close to nine in 10 investors (88%) said they believe their organisation’s appetite for risk will be higher this year, with 11% saying it will be much higher.

Among pension funds alone, 92% expect risk appetite to be higher, with 6% expecting it to be much higher, while for family offices the corresponding figures are 83% and 20% respectively.

Around 86% of insurance asset managers expect an increased risk appetite with 6% said it will be much higher. For wealth managers the figures were 85% and 14% respectively and for consultants they were 96% and 13%.

In terms of which alternative asset classes are most appealing, around 65% of those interviewed chose hedge funds as among the top three private asset classes for growth in inflows, while 57% selected venture capital and 56% said private equity.

The full findings:

John Donohoe, CEO at Carne Group, said: “Sustained stockmarket volatility and investors seeking higher returns has driven increased interest in alternative asset classes which generally show lower levels of correlation to short term price movements, which is important not only for diversification but also for regulatory purposes.

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“The growing focus on alternatives is not a short-term move either, with institutional investors predicting strong but selective growth in inflows to alternatives over the next five years. One area we are seeing a particular increase in inflows is private debt, and our research suggests this is likely to continue.”

Todd spent over eight years at Investec analysing long-only, alternatives, and passive strategies. Previously, he was an associate director of fund research at Coutts for almost five years where he made the move from portfolio management to fund research.

In his new role, Todd will be responsible for researching funds in the alternative investment universe, including hedge funds for private markets and infrastructure. He will report to head of manager research Kristian Cassar, who is the lead of one of three teams under the ‘extended research hub’. The hub also holds an operational due diligence team and responsible investing team.

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“Alternatives have become a crucial component within portfolio construction and as a result we want to ensure we have dedicated coverage from experts within the field,” Cassar said.

“The alternatives universe is vast and covers a number of sectors, so we wanted to make it easier for our portfolio managers to search deeper and wider for best-in-class funds and trusts to add to their multi-asset portfolios. Adrian brings valuable experience within alternatives, which will be a real benefit for the team and advisers we work with.”

In the final quarter of last year, Quilter reported net flows of £56m and a total assets under management and administration increase of 5% to £106.7bn.

On his move, Todd said: “Alternatives can be complex and challenging but also provide scope for differentiation and long-term outperformance in multi-asset portfolios, so I am looking forward to getting stuck in and providing ideas to the team for potential inclusion within our portfolios.”

This article was written for our sister title Portfolio Adviser

The asset class failed to record a single month of positive flows, with investors pulling £668m in December.

Money market funds, meanwhile, were the only asset class to achieve positive net flows in 2023 as investors put a net £248m into the asset class in December and £4.1bn across the year as a whole.

In December, investors favoured sustainably-labelled funds, which recorded a modest £5m net inflow compared to the £1.7bn that leaked out of non-sustainably labelled strategies.

Sustainable funds recorded £1bn net inflows for the year as a whole, while investors retrieved £27bn from non-sustainably labelled funds.

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Passive offerings continued to attract cash, pulling in a net £1.9bn in December and £21bn over the year. In contrast, active managers were hit with a £3.9bn outflow in the month and £46.7bn in 2023 as a whole.

This was mirrored in the flows recorded by individual fund groups. Passive providers such as BlackRock (£6.5bn), Legal & General (£2.8bn) and Vanguard (£2.9bn) all recorded strong inflows, while active managers such as Royal London (£8.6bn) and Baillie Gifford (£7.1bn) suffered outflows in 2023.

The top five strategies for inflows in December were all index funds, with the £10.9bn iShares North American Equity Index fund pulling in £409m.

At the other end of the scale, the £4.8bn iShares Corporate Bond Index saw £536m net outflows in the month, the largest of any single strategy.

This article was written for our sister title Portfolio Adviser

The firm asked managers whether they anticipate increased, decreased or flat fund raising. It found 85% of alternatives managers it spoke to predicted an increase in capital raising in 2024 relative to 2023.

They also found nearly one in three forecasted a rise of 50% or more, as well as an increase in the number of fund launches across all alternative asset classes.

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The professionals surveyed pointed to investors’ desire to diversify more as the key reason to expect a ‘bumper 2024’ for these assets.

The study gathered responses from managers in Europe, Asia, the Middle East, North America and the UK.

Ocorian also found notable regional trends, with US-based and Asian managers expressing stronger positive sentiment than European managers.

The full results from the survey are in the table below:

Yegor Lanovenko, co-head of fund services at Ocorian, said: “There is a high level of confidence about the year ahead among alternative fund managers both for their own funds and for the sector as a whole, with different regional sentiments emerging

“This expected surge in capital raising and fund launches turns the spotlight on efficiency and operational excellence, and fund managers increasingly rely on expert support and trusted partners to handle their fund launches and operations at scale.”

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The research took in responses from 200 UK wealth managers, financial advisers, discretionary fund managers, fund selectors and investment analysts.

Time found that 78% of respondents expect to increase allocation to alternatives over the next 12 months.

However, the research found that there are still challenges to increasing allocations, including investment strategy choice, limited knowledge of the alts market and a lack of expert alternatives fund managers.

To read more on this topic, visit: Brits continue to flock to alternative investments

Some 60% of respondents said investment strategy was a key factor in selecting an alternatives fund manager, while 47% placed emphasis on expertise across asset classes and regions. 43% highlighted an ESG approach as an important factor.

In terms of client portfolios, 26% of respondents are currently targeting a 16-20% allocation to alternatives, while 35% are targeting 11-15%. Meanwhile, 29% are currently targeting an alternatives allocation in the 6-10% range.

Henny Dovland, business development director at Time Investments said: “Our research shows that wealth managers, advisers and investment professionals are already allocating significant proportions of client portfolios to alternative investments, with targets set to increase.

“This is largely driven by the prevailing economic conditions and more conventional asset classes such as equities proving highly volatile. Alternatives provide diversification and attractive yields as investors seek to weather the storm.”

This article first appeared on our sister publication Portfolio Adviser.