Three quarters of surveyed investors believe that equity markets are at a peak, up from 61% that said the same at the end of 2018, according to The Preqin Investor Update: Alternative Assets H2 2019. Just 6% believe markets are expanding, down 15 percentage points in six months, Preqin reports.

Alternative assets will be a vital part of many investors’ approach to weather a market event. For the asset classes operating in private capital, the majority of investors plan to hold the course with their allocation strategy, in the expectation that these long-term strategies will weather a correction well. Investors in hedge funds, though, are turning to the asset class’ defensive properties as their concerns around a correction grow: 64% of hedge fund investors are looking to position themselves more defensively as a result. Among alternative assets, pricing concerns are also prevalent.

While investors in real assets believe that assets are fairly valued, private equity and real estate investors believe they are overpriced, and a correction in the pricing of these assets is due. However, the largest proportions – 56% and 46% respectively – do not anticipate a correction until 2020 or beyond.

“Increasing numbers of investors believe equity markets have peaked, with three out of four of every surveyed institution reporting this to Preqin. The important question for investors is when - and how - they can weather a correction. Alternative assets will be key for many," said Amy Bensted, Head of Data Products. "Although pricing concerns in private capital continue – particularly in private equity and real estate, investors will be relying on these funds, and their proven long-term returns, to deliver during a downturn; nearly 90% of LPs plan to increase or maintain their exposure in response to the potential correction in equity markets. Hedge funds will have a defensive role; 64% of investors are positioning their hedge fund portfolios to more defensively, as asset protection becomes a priority for them as concerns around a negative shift in public markets grows”

For more information and analysis, see the full Preqin Investor Update: Alternative Assets H2 2019 here.