Asset owners’ interest in alternatives reached a height in 2021 when a net of 45 per cent respondents said they are planning to increase allocations in the area. The demand has been trending downwards in the three years since then, but now there are signs that enthusiasm towards the asset class is picking back up.

A net of 26 per cent respondents said they will allocate more to alternatives in the 2025 survey. When breaking down the areas of allocation further, funds are most interested in infrastructure and other real assets (excluding real estate) and private equity, as well as private credit and venture capital to a lesser extent. There is also a planned net allocation increase in real estate as the beat-up sector recovers from elevated interest rates and in some pockets, such as office, offers room for opportunistic investments.

While dry powder is decreasing from the 2023 record high, suggesting impending deal activity globally, Skriba said the exit concerns are not out of the picture especially for private equity.

“I think there is a perception that there’s not a lot of places to go [for asset owners looking to allocate capital],” he said. Some respondents voiced concerns that the alternatives markets maybe approaching saturation.

The survey found that the priority for over half (56 per cent) of asset owners regarding their alternatives allocations is to create relationships with new managers, followed by negotiating lower fees (39 per cent), reducing re-ups due to lack of capital returns (33 per cent), and managing exposures through secondaries (33 per cent).

Infrastructure and other real assets have the highest planned net manager allocation increase, followed by private credit. Meanwhile, venture capital is where specialist managers are most in demand, while asset owners are more likely to co-invest alongside managers in private equity.