Key Takeaways
- • 78% of UK wealth managers and financial advisers surveyed by Time Investments intend to increase allocations to alternatives over the next 12 months, driven by economic uncertainty and volatility in conventional asset classes like equities.
- • Current alternative allocations are substantial and rising: 26% of respondents target 16-20% alternatives exposure, 35% target 11-15%, and 29% target 6-10%, indicating a shift toward higher weightings across the professional investment community.
- • Three critical barriers impede faster allocation growth: investment strategy selection challenges, limited market knowledge among advisers, and a scarcity of expert alternatives fund managers with demonstrated cross-asset-class and regional expertise.
- • Selection criteria emphasize strategy and expertise: 60% of respondents prioritize investment strategy when choosing alternatives fund managers, 47% emphasize multi-asset expertise across regions, and 43% highlight ESG considerations—signaling demand for sophisticated, comprehensive approaches.
- • Alternatives are perceived as essential for portfolio resilience: professionals view alternatives as providing diversification and attractive yields amid elevated equity volatility and challenging macroeconomic conditions.
Summary
A Time Investments survey of 200 UK wealth managers, financial advisers, discretionary fund managers, fund selectors, and investment analysts reveals strong institutional appetite for alternative investments, though structural constraints continue to limit acceleration of capital flows into the sector. The research found that 78% of respondents expect to increase allocations to alternatives over the next 12 months, reflecting a broad consensus that alternatives offer critical portfolio benefits in the current economic environment.
Current allocations demonstrate that alternatives already represent a meaningful portion of professional portfolios. According to the survey, 26% of respondents are targeting a 16-20% allocation to alternatives, while 35% target the 11-15% range and 29% target 6-10%. This distribution indicates that advisers and fund selectors view alternatives as a core, not peripheral, component of portfolio construction.
The expansion drive is fundamentally motivated by macroeconomic conditions and asset class performance. Henny Dovland, business development director at Time Investments, attributed the shift to "prevailing economic conditions and more conventional asset classes such as equities proving highly volatile." Alternatives, he noted, "provide diversification and attractive yields as investors seek to weather the storm." This framing positions alternatives not as tactical overlays but as strategic hedges against systemic volatility and equity correlation risk.
However, the survey identifies three material obstacles constraining faster reallocation. Investment strategy choice presents decision complexity for advisers; limited knowledge of the alternatives market restricts confidence levels among wealth managers; and a relative scarcity of expert alternatives fund managers with demonstrated expertise across asset classes and geographies creates a supply-side bottleneck. When selecting alternatives fund managers, respondents prioritize investment strategy (60%), multi-asset and regional expertise (47%), and ESG alignment (43%)—criteria that suggest advisers seek sophisticated, institutionally-caliber management but may struggle to identify qualified providers.
The findings suggest that while institutional conviction around alternatives is high, operational and knowledge-based barriers could cap near-term allocation growth unless investment firms and fund selectors invest in market education and expand the supply of credible alternatives expertise.
Current allocations demonstrate that alternatives already represent a meaningful portion of professional portfolios. According to the survey, 26% of respondents are targeting a 16-20% allocation to alternatives, while 35% target the 11-15% range and 29% target 6-10%. This distribution indicates that advisers and fund selectors view alternatives as a core, not peripheral, component of portfolio construction.
The expansion drive is fundamentally motivated by macroeconomic conditions and asset class performance. Henny Dovland, business development director at Time Investments, attributed the shift to "prevailing economic conditions and more conventional asset classes such as equities proving highly volatile." Alternatives, he noted, "provide diversification and attractive yields as investors seek to weather the storm." This framing positions alternatives not as tactical overlays but as strategic hedges against systemic volatility and equity correlation risk.
However, the survey identifies three material obstacles constraining faster reallocation. Investment strategy choice presents decision complexity for advisers; limited knowledge of the alternatives market restricts confidence levels among wealth managers; and a relative scarcity of expert alternatives fund managers with demonstrated expertise across asset classes and geographies creates a supply-side bottleneck. When selecting alternatives fund managers, respondents prioritize investment strategy (60%), multi-asset and regional expertise (47%), and ESG alignment (43%)—criteria that suggest advisers seek sophisticated, institutionally-caliber management but may struggle to identify qualified providers.
The findings suggest that while institutional conviction around alternatives is high, operational and knowledge-based barriers could cap near-term allocation growth unless investment firms and fund selectors invest in market education and expand the supply of credible alternatives expertise.
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