Opalesque Exclusive: DACH institutions push alternatives to 32.3% of portfolios as hedge funds make a comeback

Institutional investors in Germany, Austria and Switzerland now hold almost a third of their portfolios in alternative investments, and report greater confidence in managing them, according to the 2026 BAI Investor Survey, published in October by the German Alternative Investment Association (Bundesverband Alternative Investments e.V., BAI). The survey, conducted in July and August 2026, covers 105 institutional investors with combined assets of around EUR 2.9 trillion. Authored by Dr. Philipp Bunnenberg, Head of Alternative Markets at BAI, with Dr. Florian Bucher as co-author, the report describes a market that is consolidating rather than expanding.

Average alternatives allocation reached 32.3% of portfolios, up from 30.3% a year earlier; asset-weighted, the figure is 33.7%. For the first time since the survey began in 2013, no respondent rated itself a beginner, and 72% describe their alternatives teams as expert or near-expert, an all-time high. Infrastructure equity (84% of investors), corporate private equity (82%) and real estate equity (76%) remain the most widely held asset classes. Real estate equity is still the largest single allocation at 8.8% of the portfolio, down from 9.3%, while corporate private equity rose from 6.1% to 7.3%.

The most notable shift is in liquid strategies. Hedge funds and liquid alternatives are back in favour, with investor participation up from 15% to 21% and 23% expecting to invest over the next year. Among those invested, average allocation is 7.0%, the third-highest among invested LPs after real estate equity and corporate private equity. Infrastructure debt, corporate private debt and infrastructure equity lead net allocation plans at +40, +40 and +38 respectively. Cryptocurrencies and tokenized assets remain marginal, with just 3% invested.

The sentiment and performance picture is more mixed. Corporate private debt saw the sharpest sentiment drop in the survey, falling 0.70 points to +0.22, even as investors continue committing capital, according to BAI. Performance ratings declined across all asset classes versus 2025, with real estate debt recording the survey's lowest score at -0.77. BAI found past performance explains planned allocation changes (r-squared 0.94) far better than current sentiment (0.70).

Regionally, 70% of investors plan to increase private markets allocations in Europe against 15% planning reductions, a net balance of +55; DACH scored +20. North America split investors evenly at 40% increasing and 40% reducing. Emerging markets remain underrepresented, with 33% invested and only 3% planning entry. BAI also flagged a "negative German home bias" in infrastructure, with no sector rated better domestically than abroad. BAI acknowledged possible self-selection bias, as participants responded to an invitation from an association representing the alternatives industry.