While over half of allocators said the debate around Trump's policy agenda will have little impact on their investment decisions, European allocators feel the increasing pressures of the European regulatory environment, the implications of Brexit and the nationalist movement are impacting asset allocation decisions in 2017. According to a recent survey from Context Summits, nearly three quarters (71%) of European investors are optimistic about the future of the alternative asset management industry, with more than half (54%) planning to increase their net positions in alternative investments by the end of 2017.
The survey of institutional investors and family offices was conducted at the inaugural Context Summits Europe event hosted by Context Summits, the preeminent producer of investment summits for the alternative asset management industry. More than 300 institutional allocators, family offices and managers, representing more than $245 billion in cumulative assets under management, attended Context Summits Europe 2017, which was held in Barcelona, Spain on 7-9th May 2017 at the Hotel W Barcelona.
The results from Barcelona closely mirror survey results from Context Summits Miami 2017, where more than half (51%) of investors surveyed were optimistic about the industry and 72% planned to increase their allocations to alternative fund managers in 2017. A majority of European allocators (75%) also said they prefer investing with emerging managers rather than established managers, significantly more than the 59% of allocators polled at Miami earlier in the year who said they felt the same way.
"Europe represents a major growth opportunity for the alternative asset management industry, and we are pleased to help facilitate conversations between European-focused allocators and managers via our one-on-one format," said Mark Salameh, co-founder and CEO of Context Summits. "As the data shows, European allocators—like their US focused counterparts—are overwhelmingly optimistic about the future of the industry. While challenges remain, particularly in the political and regulatory realms, the overall consensus is that there is strong demand for new strategies and ideas."
John Culbertson, chief investment officer of Context Capital Partners, added: "Europe has experienced several market shocks in recent years, such as the Greek bailout and more recently the Brexit vote, which has caused European investors to approach the market with caution. However, while there are legitimate questions about the future of the EU and the solvency of some member countries, the overall appetite for alternative investments continues to grow."
Key findings include:
- Allocators Prefer New Over Existing Managers: More than three quarters of investors (75%) said they prefer to allocate additional capital to new managers, with nearly half of investors (48%) looking for a fund with a 1-3 year track record.
- Investors Split on Impact of Brexit: Investors were divided on the impact of the Brexit vote on Europe, with 40% calling it an opportunity, 35% a threat and 25% taking a neutral stance.
- Despite Election of Macron, Widespread Concerns About Nationalist Movement: More than 63% of investors said the destabilization of the EU as a result of the nationalist movement was the biggest long-term challenge for Europe, beating out the migration crisis (12%), Brexit (11%) and other concerns. Investors were especially worried about the slowdown of globalization, the replacement of free market policies and a recession resulting from a weakened economy.
- Regulatory Challenges Top of Mind: Institutional allocators and family offices overwhelmingly view European financial regulations, such as MiFID II, as a burden, with 78% citing regulatory costs, restrictions and uncertainties as potentially damaging to the market. Likewise, only 8% thought regulations were good for the industry as a whole.
- Trump Not Influencing Investment Decisions: A majority (56%) of investors said that Trump's policies had no effect on their investment decisions. Of the investors who did cite some impact, 32% said his administration's policies made them more bullish on risk assets and 11% said the policies made them more bearish.
- Little Agreement on Best Investments for 2017: Investors were divided when picking the asset class with the most potential for outperformance in 2017, with developed market equities emerging as the winner with just 30% of the vote. Other top picks included emerging markets (27%), commodities (10%) and cash (10%).
(Source: Context Summits)
