Clearwater Analytics’ study highlights trends, challenges, and opportunities in alternative investments
Clearwater Analytics has announced the release of its 2024 State of Alternatives study.
This report features insights from over 230 executives across sectors such as insurance, wealth and asset management, corporate and government entities, pensions, and endowments, collectively managing $10tn in assets.
The study highlights emerging trends, opportunities, and challenges in alternative investments.
Scott Erickson, chief revenue officer at Clearwater Analytics, noted that alternatives remain a highly intriguing asset class within institutional investing. As investors continue exploring opportunities in the alternatives market, various challenges and trends have become more apparent.
Key findings from the study include:
The study reveals that 55 percent of institutional investors intend to increase their alternative investments over the next five years, while only 6 percent plan to decrease them. Additionally, 35 percent of respondents aim to add to their alternative allocations based on current market conditions.
Over one-third of respondents (34 percent) identified regulatory complexities as the primary obstacle to investing in alternatives. This was followed by operational burdens and a lack of expertise (24 percent), and limited access to quality opportunities (15 percent).
Respondents cited data standardization (28 percent) as the top area needing operational improvement, followed by management and client reporting (19 percent), integration with service providers (19 percent), and regulatory reporting (16 percent).
The study highlights a strong demand for advancements in operational efficiency and software capabilities, with 72 percent of respondents indicating a need to improve in all these areas.
Jonathan Flitt, global head of Alternative Investment Solutions at Clearwater Analytics, emphasized the consensus around the importance of innovation in technological infrastructure to manage the growing complexity and scale of alternative investment portfolios.
He noted that respondents unanimously agree on the necessity for better resources and technology to effectively handle alternative investments and overcome the associated challenges.