Alternative Investments: Institutional Investors With Higher Allocations To Alternatives Did Better In Q1

Q1’22 was a forgettable quarter for institutional investors, yet alternatives saved the day for some, report Wilshire and BNY Mellon.

Wilshire Trust Universe Comparison Services and BNY Mellon’s Master Trust Universe have released data on the performance of institutional investors during the first quarter of 2022. An important takeaway from both reports is that plans and funds having a higher allocation to alternative assets outperformed those sticking with traditional allocations. (CIO)

“Large plans with higher allocations to alternative investments have outperformed as rising interest rates and tightening financial conditions have weighed on the performance of traditional assets, and the diversification benefit of alternative investments have proven valuable in this market environment,” says Jason Schwarz, president of Wilshire.

In BNY Mellon’s universe of 457 corporate, foundation, endowment, public, Taft-Hartley and health care plans, only real estate emerged with a positive return.

“According to BNY Mellon’s Master Trust Universe, real estate was the highest-performing asset class in the first quarter of 2022. Endowments benefitted from their above average allocation to real estate and other alternative investments of 60% versus the Master Trust median allocation of 32%,” says Frances Barney, head of global risk solutions at BNY Mellon.

Both Wilshire and BNY Mellon observed that endowments and foundations continue to be the institutional investors with the most exposure to alternative investments. 

Franklin Templeton expands its reach on alternatives

Last week, Franklin Templeton (NYSE: BEN) acquired BNY Alcentra Group Holdings, Inc. from BNY Mellon (NYSE: BK) for $700 million.

“The acquisition of Alcentra is an important aspect of our alternative asset strategy – the expansion into alternative European credit,” said Jenny Johnson, President and CEO of Franklin Templeton. “Alternative investments represent a significant diversification tool for our clients and an area of increasing importance for both individual and institutional investors.”

On Wednesday, Franklin Templeton announced a partnership with iCapital that will leverage the latter’s customized technology and service solution for financial advisors and their clients seeking access to Franklin Templeton’s alternative investments offerings.

“We are focused on connecting investors with our alternative investment expertise in the places and ways that are convenient for them,” said Shane Clifford, Franklin Templeton’s Senior Managing Director of Alternative Strategies. “

Related Story: BNP Paribas Launches ETFs Targeting Hydrogen And Sustainable Real Estate

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