Morningstar and Barron's recently released the results of the sixth annual survey regarding the use of alternative investments by U.S. institutions and financial advisers. Survey participants included 264 institutional investors and 365 investment advisers. While traditional equity funds experienced outflows of $84.7 billion in 2011, alternative funds had inflows of $23.2 billion. A majority of survey participants (65% of advisors and 67% of institutions) reported that alternative investments are at least as important as traditional investments. The survey found that the most popular alternative strategy for advisors was managed futures whereas institutions identified long/short equity and debt as well as private equity/venture capital as the most popular alternatives. All survey participants identified diversification as the most significant reason to invest in alternatives. Institutions identified lack of liquidity as the most significant deterrent to alternative investments while advisors found fees to be the greatest impediment.
The survey report is available at http://corporate.morningstar.com/us/asp/area.aspx?xmlfile=5396.xml.