Abstract

Subject The increasing popularity of alternative investment asset classes in the global search for yield. Significance The prolonged period of low interest rates has negatively affected insurers, making it harder for them to meet the guarantees that are attached to life products. The challenges faced by insurers have increased attention on alternative investments. Led by the United States, global investment in infrastructure is expected to increase next year. Against this backdrop, it is useful to examine alternative investment classes and the role national regulatory regimes are likely to play in the allocation of assets to alternative investments. Impacts Increased asset allocation towards alternative investments will gradually lead to more efficient investment portfolios. Under standard risk models, capital charges for alternative investments may remain prohibitive in the near term. There is likely to be an increasing role for institutional investors such as insurers and pension funds in infrastructure investment.

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