The returns of traditional asset classes have become seemingly common knowledge: equities are expected to remain close to GDP, returns on cash are expected to generally exceed inflation and fixed-interest stocks provide their gross redemption yield.
As of late, however, there is evidence to suggest that insurers are moving away from these traditional asset classes and looking into alternatives such as exposure to both infrastructure and mortgage loans.
It is clear that this shift into “alternative” asset classes to diversify returns is happening across the market with recent research showing that four out of five institutional investors now invest in at least one alternative asset class. In addition to diversification, high absolute returns, reduced volatility, inflation hedging characteristics and reliable income streams that are seen in certain alternative classes are some of the reasons for why these assets are gaining popularity.
This article (http://www.valuewalk.com/2015/08/79-of-institutional-investors-globally-invest-in-at-least-one-alternative-asset-class/ ) discusses this trend of investing in alternative asset classes and the returns to be expected for these different classes. It reveals that investors not only have high expectations of returns for alternative asset classes but additionally have confidence that these expectations will be met.