New Research Uncovers Key Trends, Opportunities and Challenges for Institutional Investors in Alternative Investments
Clearwater Analytics, a leading worldwide provider of SaaS-based investment management, accounting, reporting, and analytics solutions, today announced the release of its 2024 State of Alternatives study. The report, encompassing over 230 executive participants from sectors including insurance, wealth and asset management, corporate and government entities, pensions and endowments with $10 trillion in assets under management (AUM), delivers an overview of the emerging trends, opportunities and challenges related to alternative investments.
“Alternatives remain one of the most intriguing asset classes across the institutional investing space today,” said Scott Erickson, Chief Revenue Officer at Clearwater Analytics. “As investors continue to scan the alternatives market for opportunities, numerous challenges and trends have come into closer view. The 2024 State of Alternatives study highlights key factors and developments that will shape the alternatives landscape over the short-, medium- and long- term.”
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Institutional Investors Plan to Increase Alternative Investments
According to the study, 55% of institutional investors plan to increase their alternative investments over the next five years, while only 6% said they plan to decrease their alternative investments. In addition, 35% of respondents said that they plan to add to their alternative allocations based on current market conditions.
Regulatory Complexity a Leading Barrier to Alternative Investments
Per the study’s findings, over a third of respondents (34%) said that regulatory complexities were the leading hurdle in investing in alternatives, followed by operational burdens/lack of expertise (24%) and limited access to quality opportunities (15%).
Data and Reporting Present Biggest Operational Challenges
Per the study’s results, when asked what their biggest areas for operational improvements were, 28% of respondents pointed to data standardization, followed by management and/or client reporting (19%), integration with service providers (19%) and better regulatory reporting (16%).
Most importantly, the survey underscores a pressing need for advancements in operational efficiency and software capabilities. A whopping 72% of responses indicated a need to improve all of the focus areas listed.
“We’re not surprised by these findings. They indicate a clear consensus around the importance of innovation in technological infrastructure to support the growing complexity and scale of alternative investment portfolios,” said Jonathan Flitt, Global Head of Alternative Investment Solutions at Clearwater Analytics. “Our respondents are unanimous about needing better resources and technology to efficiently manage alternative investments and mitigate the impact of the mentioned barriers.”
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