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As their stocks increase in value, pension funds may increase their allocation of funds to real estate, to keep it a fixed portion of their portfolios, he said.
According to a study earlier this year by Greenwich Associates, about one-third of institutional investors in America plan to increase their allocation to such funds.
Two of the firms advise clients to increase their allocation to American shares substantially, while four say that it is time to take profits.
Ms Patel says: "It will take some years before investors are confident enough to increase their allocation to these specialist funds".
Greg B. Davies, head of behavioral finance at Barclays Wealth and Investment Management, said people could persuade themselves to increase their allocation to equities by joining investment clubs where the group, in theory, would be better at making a decision that was painful.
Some funds continue to increase their allocation to traditionally more conservative asset classes beyond the target date, while others do not.
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WALL STREET JOURNAL Institutions Consider Investing More in Hedge Funds | In a survey by Russell Investments of institutional investors like pension funds and endowments, 32 percent of respondents said they might increase their allocations to hedge funds and real estate, Reuters reports.
WALL STREET JOURNAL Japanese Pensions to Increase Alternative Investments | A survey by JPMorgan Chase showed that Japanese pensions we0re planning to increase their allocations to hedge funds and private equity, even after AIJ Investment Advisors was accused of losing clients' money, Bloomberg News reports.
With the exception of family offices that created their wealth in real estate, the rest will decrease their allocations to real estate or keep them the same — very few will be looking to increase their allocations to this asset class.
While many other states continue to increase their allocations in pursuit of higher returns and increased diversification, New York Governor Andrew Cuomo did manage to veto a law that would have allowed his state's beleaguered pension plans to allocate even more money to alternative investments.
"That's a trend that's been going on and they are increasing their allocation".
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