Survey respondents were more enthusiastic about alternatives than other asset classes, with a net 21 per cent of respondents planning to increase their alternative exposures.

When asked what new assets they were considering adding to their portfolios in the next three years, the largest number of respondents (24 per cent) selected real assets. The broad ‘other’ category tied with fixed income for the second largest number of respondents at 19 per cent, suggesting a growing appetite for innovative and new asset classes that do not fit into traditional categories.

Breaking alternative allocations down further, CIOs were increasing their allocations to infrastructure/real assets, private credit and, to a lesser extent, private equity and venture. But they were decreasing allocations to hedge funds and real estate. However caution remains. While allocations to alternatives are still on the increase, the rate of increase is the lowest it has been in at least five years.

“Allocators still view private markets as the place to deliver alpha relative to public markets,” Cloherty said. “That said, when you get under the hood of a lot of these asset classes, there are levels of concern.