Virtual data room provider Intralinks has released the initial results of its 2018 LP Survey which, among other things, found that nearly two-thirds of the limited partners (LPs) queried expect to increase their allocations to alternative investments in 2018.
“The equity markets this year are again seeing more volatility. As a result, diversification into actively managed alternative funds continues to be a strong ‘pull’ factor,” says Matthew Porzio, SVP Marketing & Strategic Business Development at Intralinks.
The second annual survey, a collaboration between Intralinks and Global Fund Media, covers a diverse range of topics including investment preferences, the operational due diligence (ODD) process, gender diversity, transparency and direct investing. More than 150 limited partners responded to the survey, the full findings of which will be published in September.
“The relationship between LPs and general partners (GPs) plays a significant role in everything from private equity capital and hedge funds to private credit and real estate investing,” says Leif O’Leary, CEO of Intralinks. “This survey provides critical insights into that relationship by giving GPs a crystal ball of sorts.”
Aside from commingled limited partnerships, nearly 50 per cent of respondents are targeting direct investment vehicles in the year ahead as their preferred investment method. Separately managed accounts and co-investment vehicles follow at 33 per cent and 29 per cent, respectively.
Of those respondents interested in direct investing, more than 64 per cent of respondents said they will focus on mid-market private equity investments over the course of the year. Just under 32 per cent said they will focus on regional infrastructure. Core real estate and core-plus real estate account for about 30 per cent of direct investment plans.
A vast majority of investors are disappointed by the level of transparency being reported by GPs. More than 70 per cent of respondents felt transparency was ‘average,’ ‘could do better’ or ‘needs to significantly improve.’
Only 13 per cent of respondents said performance of their alternatives portfolio over the past year had exceed their expectations, while 58 per cent said the performance was broadly in line with their expected returns.
Nearly 68 per cent of respondents said they had no concerns over how GPs handle personal information in light of new data privacy regulations like the General Data Protection Regulation (GDPR).
Just over one-half of respondents said they have in-house ODD teams. Just under 14 per cent said they turn to external due diligence consultants to help assess managers, while 36 per cent rely on a combination of in-house and external resources.
For more detailed information about the survey’s key takeaways, please click here.
