Fund managers shift toward alternative assets and core-satellite strategies

Recent industry surveys indicate significant shifts in investment strategies among fund managers and private equity firms. According to Clearwater Analytics, 90% of surveyed fund managers expect to expand their use of alternative assets, such as private assets, infrastructure, and hedge funds, within the next three years. Many are moving toward core-satellite asset allocation strategies, driven by advanced portfolio management systems and integrated data analytics. Additionally, 69% of managers predict a rotation away from US markets toward Europe and thematic investing over the next two years.

In the private equity sector, a BDO survey of 400 US managers reveals intensifying competition for quality assets. Approximately 82% of respondents expect deal prices to rise over the next year due to a shortage of attractive assets relative to available capital. To manage a challenging exit environment, 80% of firms are holding portfolio companies for five years or more. Furthermore, 94% of private equity respondents stated that artificial intelligence is fundamentally changing their investment theses, impacting everything from due diligence to portfolio management.