While competition for assets, valuations, and rising interest rates top the list of investor concerns, more than a third (35 percent) plan to invest more in private capital over the next 12 months, with a further 51 percent expecting to invest the same amount, and just 14 percent planning to invest less, a survey from Preqin showed Wednesday.

Across private capital, an average of 90 percent of limited partners (LPs) globally said performance had met or exceeded expectations, compared with 72 percent of hedge fund investors, according to the survey.

The exclusive survey “H1 Investor Outlook for 2022″ hears from more than 350 LPs, interviewed in November 2021, investing across alternative assets — breaking down investor sentiment in the following categories: environmental, social, and governance (ESG), private equity, venture capital, private debt, hedge funds, real estate, infrastructure, and natural resources.

Preqin first provided its Investor Outlook in 2008, and since then, has kept its finger on the pulse of what investors are thinking throughout the alternatives industry. In 2022, investors have come through the pandemic more committed than ever to their alternatives programs. Institutional investors value the diversification, high absolute, and risk-adjusted returns they get from their allocations to alternatives and these benefits have, historically at least, persisted during times of crisis, including both the global financial crisis and COVID-19.

The survey also showed nearly three quarters (72 percent) of investors believe fund managers are adopting ESG policies because of pressure from existing and prospective LPs, in line with previous years.

However, it showed there was a notable increase in the proportion of LPs seeing political pressure as a driver, which climbed from seventh most important factor to third.

Crucially, it said investors do not see ESG as having a negative impact on performance, with 55 percent saying an ESG focus has no impact.

The 23 percent who see an ESG focus as positive on returns is marginally higher than the 22 percent who see a negative impact, according to the survey.

In this year’s survey, it said at least 30 percent of fund managers across all alternatives asset classes have an active ESG policy. Private equity leads the pack, at 43 percent, followed by private debt and infrastructure, at 39 percent. Hedge funds (30 percent) trail the field for the second successive year.

“Despite the uncertainty around us, investors, managers, and advisors continue to look for opportunities in the rapidly growing and evolving alternative assets industry. The pandemic that defined the past two years has proven a catalyst for taking a closer look at the value of human and natural capital — climate change and broader ESG concerns are no longer a niche but the norm,” said David Lowery, Senior Vice President, Head of Research Insights at Preqin.

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