Despite the majority of institutional investors hoping to increase their investment in alternatives over the next five years, there is major concern that regulatory complexities could pose a barrier to entry, according to new research carried out by Clearwater Analytics (CWAN).
Institutional investors wanting to pump more cash into alternative investments feel hamstrung by regulatory red tape, according to research from Clearwater Analytics.
In a survey of over 233 asset managers, insurers, pension funds and corporate investors, more than half of them (that’s 55%) are eyeing a boost in their alternative investment game over the next five years, with just 27% expecting it to remain at the same level or decrease. But just over a third of those surveyed (34%) are pointing fingers at regulatory complexities as the main buzzkill when it comes to diving into alternative markets.
When it came to identifying the areas where they saw the most significant opportunity to improve operations over alternatives, over a third (35.2%) identified a form of reporting (management, client, and or regulatory), while 27.5% see standardization of data as their key area for improvement.
“Institutional investors are eager to amplify their alternative investment strategies, but regulatory hurdles are raining on their parade,” according to Jonathan Flitt, Global Head of Alternative Investments at Clearwater Analytics. “As institutional investors navigate the regulatory complexities in alternative investments, the imperative for strong oversight of reporting obligations becomes crystal clear. In an era of increasing complexity, diligent regulation is the compass guiding us towards transparency and stability in financial markets.”
