“What’s Next? Investment Trends for the Future” – A New Study Gauges the Institutional View Three Decades Into the Future

October 18, 2019 | Latest News, News, Special Reports

The poll explores institutional investors’ sentiment and allocations regarding the dominant economic trends in the global economy.

Investcorp, a leading global provider and manager of alternative investment products, conducted the new study. It showed that 78% of respondents were very confident that an aging population would be the most important trend over the next thirty years.

According to Rishi Kapoor, Co-Chief Executive Officer, Investcorp, institutional institutions are long-term custodians of capital. Accordingly, they must identify opportunities in alignment with super-secular trends.

Private markets the optimal channel for trend of aging population

Over the last decade, institutions have been increasing allocations to private markets. Therefore, this channel seeks to capitalize on long-term trends within a diversified investment strategy.

“The findings from our poll support the thesis that this dynamic shall continue,” said Kapoor. “We will, of course, look to capture many of these trends as we seek to drive long-term value creation for our investors.”

Poll findings: Aging Population

Eight out of 10 respondents identified the aging demographic as a key investing driver. What is interesting, however, is that 62% chose to capture the trend via private markets. Of this segment, 38% preferred the private equity route, and 21% opted for real estate.

The aging trend is likely to peak out around 2030-2032.

Other trends

  • AI and machine learning, to peak around 2030-2032
  • Climate change, to peak around 2034-2036
  • Urbanization and smart cities 2036
  • Redefining global trade 2023-2024

“The longer time horizons associated with private market investing compared to public markets is a key advantage for investing in mega-trends,” said Alan Pardee, Managing Partner at Mercury Capital Advisors.

This trend is playing out right now. A survey by the American Investment Council of 165 pension funds found that private equity outperformed other asset classes by a wide margin, and topped the returns table for seven consecutive years. Annualized returns on private equity over ten years to 2018 came in at 10.2%. Meanwhile, those on equities returned only 8.5%.

Study credits

Investcorp commissioned the study, Mercury Capital Advisors approached respondents, and the data was collected and analyzed by IMD Business School.

The study covered 185 institutional investors with more than $10 trillion in AUM.

[Related Story: CalSTRs Bets Big on Private Equity in H1 2019 ]

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