November 12, 2024 — Asian institutional investors are optimistic about the future investment environment and are looking to put capital to work across a range of asset classes—especially in international assets and alternatives, where asset owners are planning a significant boost to allocations.

Every year, Coalition Greenwich asks decision-makers for Asia’s largest institutional investors about their investment strategies and the managers they use to execute those strategies. This year, the institutions participating in the research laid out ambitious plans to shift portfolio assets to international debt and equity, and, to an even greater extent, to a list of alternative strategies ranging from private debt to hedge funds.

International and Alternative Allocations
Starting with traditional asset classes, 42% of institutions in the study plan to significantly increase target allocations to international/global fixed income over the next three years, and 35% plan major increases to target allocations for international/global equity, with only 4% and 7% of institutions, respectively, planning meaningful reductions. 

Alternatives are the key areas of focus for most Asian institutions. Over the next three years, 70% of the participating institutions plan to significantly increase target allocations to private debt. (Private debt currently makes up approximately 4% of Asian institutional assets.) Over that same period, 58% are planning major increases to infrastructure debt. For both strategies, not a single respondent reported plans to reduce target allocations. 

“In our decades of research with institutional investors around the region, we have seen such strong and unanimous enthusiasm grow over the years,” says Arifur Rahman, Senior Relationship Manager at Coalition Greenwich and co-author of In Asia, Optimistic Institutions Plan Major Move into Alternative Assets.

Private debt and infrastructure debt are not the only alternative asset classes generating enthusiasm. Smaller shares of institutions are planning to expand allocations to infrastructure equity, commodities and private equity. 

“Despite institutions’ bullishness on alternatives, it will take considerable time for institutions to reach newly expanded target allocations,” says Ken Yap, Head of Investment Management – Asia at Coalition Greenwich and report co-author. “Some institutions might not get there at all, given limited capacity and the technical demands of assembling and managing an alternatives portfolio.” 

In Asia, Optimistic Institutions Plan Major Move into Alternative Assets presents the data on the overall growth and distribution of Asian institutional assets, current and expected portfolio allocations, return expectations, managing hiring plans, manager selection criteria, ESG, and other important topics.