Alternative investing poised for recovery in the coming years

Survey indicated that events of the past two years have brought alternative investors' risk management and governance concerns into sharper focus.

Russell Investments has surveyed large tax-exempt institutions - public and corporate pension funds, endowments and foundations generally with assets of $1 billion or more - in North America, Europe, Japan and Australia to gauge their participation in and expectations for core alternative investing strategies.

The Russell Investments Survey on Alternative Investing found that respondents expect to increase the proportion of their portfolios committed to hedge funds to as high as 9-10 % in Japan/Asia in 2012.

This year's survey also found that allocations to private equity declined in 2009 due to the strong rebound in publicly traded equities but are expected to rebound in 2012. Expectations for 2012 are not as robust in either Europe (3.7% share expected) or Japan(2.5%). In Australia, private equity allocations were reported at 3.5% for 2009, with little increase expected in 2012.

For 2009, real estate's share of the total investment portfolio for institutional investors responding to the Russell survey stood at 2.7% in Japan. Respondents from different areas are expecting valuation-driven increases by 2012 in each of these regions.

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