Who's deep into real assets?
aiCIO | August 08, 2012
Azelby argues that “institutional investor mindsets toward real asset exposure are changing so rapidly and significantly that their allocations to these assets will be approximately 25% of their entire portfolio within the next decade, up from their current level of just 5% to 7% now.”
Who's Deep Into Real Assets?
We have a list, courtesy of JP Morgan via S&P.
(August 8, 2012) – Joe Azelby, JP Morgan’s head of Global Real Assets, is seeing a structural shift in many institutional portfolios toward real assets, and he's got examples.
Azelby’s office forwarded aiCIO a list of 54 pensions, endowments and foundations with at least 25% allocation to real assets, which JP Morgan defines as investments in real estate (including Real Estate Investment Trusts), infrastructure, and shipping, as well as commodities and related investments such as timberland, farmland, and natural resources. JP Morgan compiled the list from S&P data.
Endowments and foundations dominate the list, with a number of corporate and public pensions in the mix. Here’s a selection of institutional investors deep in the alternative assets game: ATP, British Steel, BT, Dallas Police & Fire Pension System, Ontario Teachers’ Pension Plan, American Diabetes Association, National Association of Letter Carriers, Gettysburg College, Yale University, Duke University, Case Western Reserve University, Norsk, BBC, Marine Engineers Beneficial Association, and the Austin Police Retirement Fund.
Based on the actions of these institutions and many others, Azelby argues that “institutional investor mindsets toward real asset exposure are changing so rapidly and significantly that their allocations to these assets will be approximately 25% of their entire portfolio within the next decade, up from their current level of just 5% to 7% now.” In other words, he sees Yale, Duke and BT at the forefront of paradigmatic shift toward alternative assets for institutional portfolios.
With interest rates low and stock indexes underperforming most institutions' targets, investors are searching for another option. And of course, many financial firms are making the hard sell for alternative assets right now, given that vacuum that has opened up between the pricey bond market and volatile equities. But this list released by Azelby, who is in charge of about $60 billion in real assets, demonstrates that this ‘trend’ toward alternative investments isn’t just marketing and PR by the firms who stand to gain. It’s appears to be actually happening—ask Ontario Teachers’.
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