Institutions pessimistic about alternatives

The majority of institutional investors in the United States expect their alternatives holdings to perform worse this year than last, according to a survey by Natixis Global Asset Management SA. They are feeling more bullish about equities, though. U.S. equities were the top pick among the 97 institutions surveyed by Natixis to be the best-performing asset class this year, followed by private-equity, global and emerging-markets stocks. “We're starting to hear there's more interest in equities and more of a belief that they'll perform better over the long term,” said David L. Giunta, president of Natixis Global Asset Management's U.S. distribution. Despite the bullishness on private equity, 52% of institutions said that they expect their alternatives holdings to do worse this year than last. Institutions are the most bearish when it comes to gold. Four out of five plan to reduce exposure to the precious metal this year. Alternatives are still seen as an essential part of the portfolio by 79% of institutions, particularly because they covet the diversification such investments offer at a time when 75% of institutions contend that it will be a challenge to protect against market swings. Other areas that institutions are cutting include global and U.S. bonds, with 43% and 30% planning to cut their positions in those asset classes, respectively. Emerging-markets stocks are the asset class that institutions plan to add the most to this year. Two out of five institutions said that they plan to add to that asset class this year, 38% plan to add to U.S. stocks and 37% will add to global stocks.