Investors push into alts to battle inflation

A new survey of global allocators and LPs found that roughly 20% have yet to make adjustments to their alternatives exposure and are likely to do so as inflation is expected to inch higher.

Conducted by investor technology provider Vidrio Financial last month, the survey found that a majority (70%) have already boosted their alternative investment portfolios in anticipation of the impact of inflation on their investment returns.

“Many large institutional investors have made shifts to their portfolios on the margin to counteract potential near-term inflationary issues with alternatives benefiting, though many allocators were sanguine that even after a 40-year bull run in Treasuries any rise in inflation would not have a significant impact on overall portfolio returns,” wrote Gygmy Gonnot, managing director and head of Vidrio Research, in the firm’s inaugural Vidrio Views Survey.

Perhaps it comes as no surprise that commodity and macro hedge funds are back in that both were popular choices for investors responding to inflation with 44% allocating seeking commodity firms and 33% macro strategies.

Private equity, which is also seen as a diversifier from the equity markets and interest rates, also saw increased interest with 44% of surveyed investors expecting further growth for the asset class, even against a backdrop of rising inflation expectations.

Overall, Vidrio surveyed global allocators and LPs representing more than $100 billion in alternatives assets under management.