More than half of European alternative investors think President Donald Trump’s policy agenda will have little impact on their overall investment decisions, according to a new survey from Context Summits. Instead, they’re worried about the increasing regulatory pressures in Europe, Brexit’s aftermath, and nationalist political movements in the region.
The survey, which polled more than 300 institutional investors and family offices representing more than $245 billion in cumulative AUM, took place at Context’s inaugural Context Summits Europe 2017 event last week in Barcelona.
Key highlights from the survey:
- European Investors Optimistic About Alternative Investments: Nearly three quarters (71%) of investors are optimistic about the future of the alternative asset management industry, with more than half (54%) planning to increase their net positions in alternative investments by the end of 2017.
- Allocators Prefer New Over Existing Managers: More than three quarters of investors (75%) said they prefer to allocate additional capital to new managers, with nearly half of investors (48%) looking for a fund with a 1-3 year track record.
- Investors Split on Impact of Brexit: Investors were divided on the impact of the Brexit vote on Europe, with 40% calling it an opportunity, 35% a threat and 25% taking a neutral stance.
- Despite Election of Macron, Widespread Concerns About Nationalist Movement: More than 63% of investors said the destabilization of the EU as a result of the nationalist movement was the biggest long-term challenge for Europe, beating out the migration crisis (12%), Brexit (11%) and other concerns. Investors were especially worried about the slowdown of globalization, the replacement of free market policies and a recession resulting from a weakened economy.
- Regulatory Challenges Top of Mind: Institutional allocators and family offices overwhelmingly view European financial regulations, such as MiFID II, as a burden, with 78% citing regulatory costs, restrictions and uncertainties as potentially damaging to the market. Likewise, only 8% thought regulations were good for the industry as a whole.
- Trump Not Influencing Investment Decisions: A majority (56%) of investors said that Trump’s policies had no effect on their investment decisions. Of the investors who did cite some impact, 32% said his administration’s policies made them more bullish on risk assets and 11% said the policies made them more bearish.
- Little Agreement on Best Investments for 2017: Investors were divided when picking the asset class with the most potential for outperformance in 2017, with developed market equities emerging as the winner with just 30% of the vote. Other top picks included emerging markets (27%), commodities (10%) and cash (10%).
The results from Barcelona closely mirror survey results from Context Summits Miami 2017, where more than half (51%) of investors surveyed were optimistic about the industry and 72% planned to increase their allocations to alternative fund managers in 2017. A majority of European allocators (75%) also said they prefer investing with emerging managers rather than established managers, significantly more than the 59% of allocators polled at Miami earlier in the year who said they felt the same way.
“Europe represents a major growth opportunity for the alternative asset management industry, and we are pleased to help facilitate conversations between European-focused allocators and managers via our one-on-one format,” said Mark Salameh, co-founder and CEO of Context Summits, in a stateement.
“As the data shows, European allocators – like their U.S.-focused counterparts – are overwhelmingly optimistic about the future of the industry,” he added. “While challenges remain, particularly in the political and regulatory realms, the overall consensus is that there is strong demand for new strategies and ideas.”
Founded in 2013, Context Summits hosts a series of alternative investment industry events each year. The company is part of Context Capital Partners, an alternatives specialist founded in 2005 whose subsidiaries offer a diverse range of investment strategies, including hedge funds, liquid alternative mutual funds, and private equity funds.
In addition to Context Summits, the firm’s business units include Context Jensen Partners, Context Asset Management, Context BH Capital Management, Context Liberty Bell, Titan Capital Management and Adams Business Credit. Since inception, Context has led hedge fund seed deals totaling more than $400 million.