Roughly 53% of U.S. endowments, foundations and healthcare investors are increasing allocations to private equity, according to research findings by the $8.5 trillion asset management powerhouse BlackRock.
The firm, which manages $35 billion in private equity, found that the interest remained in generating “much-needed returns amid volatile markets and mounting macro risks.”
“In 2022, mitigating macroeconomic risk has been a top priority for non-profit investors — even more so than interest rate risk,” says Lili Forouraghi, head of U.S. Endowments and Foundations at BlackRock. “We’ve been working closely with clients who are increasingly looking to implement more diversified private assets into their asset allocation programs while managing costs.”
BlackRock partnered with Coalition Greenwich to conduct a survey of 87 U.S.-based investors (31 endowments, 31 foundations and 25 healthcare systems) earlier in 2022.
Survey participants cited inflation, rising interest rates and drawdown risks as primary risk factors. Positioning their portfolios for these risks includes investments in real estate, natural resources and floating-rate debt.
When it comes to private equity, 75% of those surveyed said private equity is the alternative asset class of choice. One third indicated an intention to increase their private equity allocations by up to 10%, and one-fifth are plotting to boost exposure between 10% and 20%.