View our Evenco Analytics United Kingdom October 2022 report.
UNITED KINGDOM Q4 2022 ALTERNATIVES REPORT
ALTERNATIVES
Inflation Protection Sought UNITED KINGDOM Q4 2022 ALTERNATIVES REPORT
ASSET ALLOCATION - ALTERNATIVES (%)
Real Estate
Infrastructure
Commodities & Infrastructure Lead
34.8
56.5
21.7
52.2
Commodities and infrastructure were the most overweight alternatives among the U.K. fund selectors. The next most popular overweight allocation was to hedge funds (26.1% overweight and 39.1% being neutral). Also notable is the popularity of real estate investments; while only half of the respondents invest (52.2% said they do not invest), close to half who do invest are currently overweight.
8.7
0
21.7
4.4
Commodities
Hedge Funds
26.1
34.8
39.1
30.4
39.1
0
26.1
4.4
Collectibles
Private Equity
Private Debt
4.5
86.4
13.1
56.5
4.6
63.6
9.1
0
21.7
8.7
18.2
13.6
No Investment
Underweight
Neutral
Overweight
Demand for Alternatives Remains
Why are you looking to increase your current exposure to alternatives funds? (%)
40.0 40.0
0
30.0
30.0
Overwhelmingly UK investors are looking to maintain (61.9%) or increase (33.3%) allocations to alternatives. No investor who took part in the survey said they would decrease their allocation.
Tackle inflation
Improve diversification
Enhance risk control
20.0 20.0
Satisfy client requirements
Be part of an emerging trend
Manage economic uncertainty
10.0
Increase returns
Other
Are you happy with your alternatives portfolio performance YTD? (%)
10.0
25.0
Very satisfied
30.0
Satisfied
Neutral
Why are you looking to decrease your current exposure to alternatives funds? (%)
66.7
Disappointed
0
0
35.0
Very disappointed
50.0
Poor performance
Are you looking to change your current exposure to alternatives funds? (%)
To balance portfolio
4.8
Volatility
33.3
Satisfy client requirements
Trend is exhausted
33.3
Maintain
Unsatisfactory funds available
16.7 16.7
Increase
Complicity
61.9
Decrease
Looking to change external asset management
ASSET ALLOCATION - ALTERNATIVE UCITS (%)
Long/Short Equity
Managed Futures
Global Macro & Multi-Strategy at Top
10.0
22.7
25.0
Among alternative UCITS funds, the most popular strategy was global macro (42.9% neutral and 33.3% overweight). Amid the heightened geopolitical volatility of the past year, the scope for a skilled global macro manager to exploit opportunities would appear to be high.
40.9%
50.0
5.0
18.2
60.0
9.1
Market Neutral
Multi Strategy
Commodities
Fixed Income Arbitrage
27.3
27.3
13.6
31.8
22.7
40.9
40.9
22.7
54.6
22.7
9.1
31.9
40.9
9.1
4.5
Volatility Trading
18.2
Global Macro
Long/Short Debt
19.0
13.6
33.3
35.0
63.7
4.8
4.5
50.0
15.0
42.9
No Investment
Underweight
Neutral
Overweight
Tackling Inflation Key for Alternatives Exposure
Why are you looking to increase your current exposure to alternative UCITS funds? (%)
60.0
Investors told us their main reasons for increasing alternatives was to tackle inflation and improve diversification. So, it is little surprise that the most popular alternatives in our snapshot survey are commodities and infrastructure – asset classes notable for their resilience to inflation and their ability to hold their heads when equities fall. The overweight for commodities (39.1%) and for infrastructure (34.8%) are the most emphatic overweights across equities, fixed income and alternatives in our survey. The worth of holding commodities can be illustrated in that the iShares GSCI Commodity Dynamic Roll Strategy ETF has returned 18.73% in the year to date.
Tackle inflation
Improve diversification
30.0
30.0
Enhance risk control
Satisfy client requirements
20.0
20.0
Be part of an emerging trend
Manage economic uncertainty
10.0
10.0 10.0
Increase returns
Other
Are you happy with your alternative UCITS portfolio performance YTD? (%)
4.8
23.8
33.3
Very satisfied
Satisfied
Why are you looking to decrease your current exposure to alternative UCITS funds? (%)
60.0 60.0
0
0
Neutral
38.1
Disappointed
Very disappointed
40.0
Poor performance
Are you looking to change your current exposure to alternative UCITS funds? (%)
To balance portfolio
23.5
Volatility
Satisfy client requirements
20.0 20.0
Maintain
Trend is exhausted
Increase
Unsatisfactory funds available
Decrease
Complicity
76.5
Looking to change external asset management
What is the main reason for changing a fund in your portfolio? (%)
What level of volatility do you aim for in your investments? (%)
12.4
10.0
16.7
Below 3
40.0
Shift in asset allocation
54.2
Between 3 - 6
A new opportunity
Between 6 - 9
Changes in the investment management team Poor performance Unpredictable behaviour of the fund manager
50.0
Above 9
16.7
Do you think that recent geopolitical developments will lead to adjustments of your ESG approach? (%)
16.7
What are the most important three factors when selecting a third-party fund? (%)
91.7
79.2
Yes
83.3
No
Track record
54.2
Process
41.7
Performance
Will Europe go into a recession this year? (%)
Investment team
12.5
Fund size (AUM)
Fund management company
16.7
Yes
Management Fee
8.3
8.3
No
87.5
CONTACT US analytics@evencointernational.com MORE INFORMATION evencointernational.com/evencoanalytics.com
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