Sovereign wealth funds, public pension funds and central banks say the complexity of alternative investments is one of their biggest challenges as they diversify their investment portfolios, according to a joint study done by U.S. financial firm State Street Corporation and U.K. media group the Financial Times.
After surveying 62 executives at these institutional investors, they found that a quarter of such investors say their biggest investment challenge is managing the complexity associated with alternative investments such as private equity and hedge funds.
Other challenges include emerging market volatility, where 37% of those surveyed are concerned about its uncertainty.
The anemic global economic climate is also a hurdle, while expected interest rate hikes after a long period of loose monetary environment is another concern.
These institutions are managing their increasing portfolio complexity by maintaining a rigorous risk management process.
Specially, they are streamlining operations and using their data to generate greater insight and value, says the survey.