Institutional investors prefer direct ownership of real assets, according to a study by Aquila Capital.
Aquila said 57% of the European investors it surveyed believe direct ownership is the best approach.
However, only 43% currently use it.
Stuart MacDonald, managing director at Aquila, said: 鈥淭here is a growing appreciation among institutional investors of the benefits of direct ownership of real assets, and, over the coming years, we can expect to see a narrowing of the gap between actual and desired levels of this approach.鈥�
Institutional investors are, Aquila said, set to increase their direct ownership of real assets.
Specialised investment funds are used by 38% of those surveyed, closed-end funds by 32% and club deal/co-investments and managed accounts by 16%.
Nine out of 10 investors (90%) said they had some exposure to real assets, and 44% had more than 10% exposure.
Property was the most popular asset, with 74% of investors having exposure to it, followed by infrastructure (37%), commodities (26%), renewable energy (21%), timber (18%), shipping (7.9%) and farmland (2.6%).
The study showed that the most significant deterrent to investing in real assets was the lack of liquidity, which was cited by 55% of respondents.
Other reasons included institutions鈥� lack of understanding of real assets (33%), limited long-term performance history (30%), a lack of suitable investment products (25%), fear of poor returns (23%) and unwillingness to diversify into 鈥榰ntested鈥� investment sectors (20%).
For real assets to become more compelling, institutional investors said product providers must demonstrate greater transparency (60%), assets should be run by managers with experience of managing them (41%), fees should be lower (32%), due diligence should be clearer (30%) and products need better scalability (14%).
Investors, Aquila said, also need to have a clearer understanding of the risk/return profile of real assets (41%).
