Pension funds to go after alternatives in 2014News added by Benefits Pro on January 21, 2014

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Joined: September 07, 2011

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By Dan Berman

Large institutional investors including pension funds, have their sights for 2014 set on alternative investments, such as real estate and real assets, according to a survey by BlackRock.

"Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets, and rising correlation between stocks and bonds," said Robert Goldstein, senior managing director and head of BlackRock's Institutional Client Business and BlackRock Solutions, in a statement.

To that end, 49 percent of those surveyed said they planned to move into real estate, while 40 percent said real assets had captured their attention. One-third said they would reduce their cash reserves this year.

For the survey, BlackRock canvassed approximately 100 institutional investors around the world, including corporate and private pension funds, insurers, investment managers, and government entities. In total, the investors surveyed represent more than $6 trillion in assets under management, with an average AUM of $70 billion.

Hedge funds were also on the radar screens of investors, with 30 percent saying they would increase their allocations in this sector this year. The figure in the Americas was higher, at 40 percent. None of those surveyed said they planned to decrease their allocations to hedge funds.

Increasing their allocations to private equity was planned by about a third of those surveyed, although those with less than $20 billion in assets under management were less likely to lean this way.

The survey was released as BlackRock announced it was forming a U.S. Retirement group that would be headed by Chip Castille, the head of the firm’s defined contribution business.

BlackRock said the idea was to extend the reach of its U.S. and Canada Defined Contribution unit by focusing on helping clients resolve retirement issues by providing strategies and services.

The group will be charged with setting product strategy and coordinating the marketing strategy around the construction of a multi-asset class platform for BlackRock’s IRA and DC channels.

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