GPI 2021: Strategic assets

Funds seek out new alternatives.

THE COVID-19 CRISIS has given rise to new investment opportunities, while raising doubts about the viability of some existing ones. Faced with a low-yield environment, global public investors continue to search for alternative investments, whether in infrastructure and real estate, or more novel ventures in technology. Even though these areas are relatively illiquid, their importance in driving economic activity not only makes them attractive to investors, but also stokes worries about their vulnerability to foreign control and influence. GPIs are still bullish on alternative assets: overall, survey respondents say they want to increase or maintain their allocations.

The 2021 GPI survey, conducted between February and March, captures the mood of asset owners one year into the pandemic. Significant numbers of sovereign fund respondents plan to increase their investments in private equity (63%), real estate (50%) and infrastructure (38%). Not a single sovereign fund in the sample said it would reduce allocations to these asset classes. Pension funds are similarly optimistic, although in this group of investors, a small percentage indicated that they will reduce allocations to all three classes.

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