Key Takeaways
- • 71% of European institutional investors and family offices express optimism about the alternative asset management industry, with 54% planning to increase net positions in alternatives by year-end 2017, significantly outpacing the 51% optimism rate among US-focused investors surveyed in Miami.
- • Regulatory reform and political uncertainty emerge as primary headwinds, with 82% of respondents stating EU investment attractiveness has deteriorated or stagnated over the past 12 months, driven by concerns about nationalism, Brexit fallout, and globalization slowdown.
- • New manager demand remains robust across geographies, with 75% of European allocators preferring investments with new managers and 48% comfortable with managers carrying only one to three years of track record—representing strong appetite for emerging strategies despite macro headwinds.
- • Brexit and EU political fragmentation present mixed risk-reward dynamics, with 40% of investors viewing Brexit as an opportunity, 35% as a threat, and 25% neutral; however, 63% cite rising nationalism and potential EU structural changes as the greatest long-term challenge to European investment.
- • Alternative asset allocation acceleration reflects flight from traditional regulatory constraints, as investors seek new strategies and structures to navigate Trump administration policies, tax reform uncertainty, and tightening EU compliance regimes.
Summary
European institutional investors and family offices demonstrate markedly stronger conviction in alternative assets than their US counterparts, according to a Context Summits survey of 300 allocators conducted in Barcelona. The 71% optimism rate for the alternative asset management industry substantially exceeds the 51% optimism recorded at Context's concurrent Miami summit, signaling differentiated regional sentiment despite overlapping macro concerns. Most significantly, 54% of European respondents committed to increasing net positions in alternatives by December 2017, indicating near-term capital deployment intentions rather than speculative positioning.
This optimistic posture coexists with profound skepticism regarding the regulatory and political environment. An overwhelming 82% of surveyed investors report deterioration or stagnation in EU investment attractiveness over the preceding 12 months—a data point that underscores disconnect between bottom-up confidence in alternative strategies and top-down concern about structural impediments. Regulatory reform ranks as the critical constraint limiting capital flows, with investors citing complex compliance burdens, fragmented national screening regimes, and EU-wide capital markets fragmentation as systemic barriers to competitive positioning against US and Chinese alternatives.
Brexit and nationalist political movements create asymmetric risk perception among allocators. While 40% of investors characterize Brexit as an investment opportunity and 35% view it as a threat, broader European political dynamics command greater concern: 63% identify rising nationalism and potential EU structural changes as the most significant long-term challenge, with specific anxiety around France's political trajectory. Investors explicitly flagged slowdown of globalization, replacement of free-market policies, and recessionary risks from economic weakness as material headwinds.
Manager selection criteria reveal aggressive capital deployment posture despite macro uncertainty. Across both European and US surveys, 75% of allocators express preference for new managers, while 48% demonstrate comfort with one-to-three-year track records—a finding that contradicts traditional institutional conservatism and signals strong appetite for emerging strategies. This dynamic suggests allocators view regulatory and political fragmentation as creating opportunity windows for unconventional approaches and less-encumbered fund structures, particularly in Europe where regulatory burden remains most acute.
This optimistic posture coexists with profound skepticism regarding the regulatory and political environment. An overwhelming 82% of surveyed investors report deterioration or stagnation in EU investment attractiveness over the preceding 12 months—a data point that underscores disconnect between bottom-up confidence in alternative strategies and top-down concern about structural impediments. Regulatory reform ranks as the critical constraint limiting capital flows, with investors citing complex compliance burdens, fragmented national screening regimes, and EU-wide capital markets fragmentation as systemic barriers to competitive positioning against US and Chinese alternatives.
Brexit and nationalist political movements create asymmetric risk perception among allocators. While 40% of investors characterize Brexit as an investment opportunity and 35% view it as a threat, broader European political dynamics command greater concern: 63% identify rising nationalism and potential EU structural changes as the most significant long-term challenge, with specific anxiety around France's political trajectory. Investors explicitly flagged slowdown of globalization, replacement of free-market policies, and recessionary risks from economic weakness as material headwinds.
Manager selection criteria reveal aggressive capital deployment posture despite macro uncertainty. Across both European and US surveys, 75% of allocators express preference for new managers, while 48% demonstrate comfort with one-to-three-year track records—a finding that contradicts traditional institutional conservatism and signals strong appetite for emerging strategies. This dynamic suggests allocators view regulatory and political fragmentation as creating opportunity windows for unconventional approaches and less-encumbered fund structures, particularly in Europe where regulatory burden remains most acute.
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