More than half (53%) of large institutional investors expect allocations to alternatives to rise over the next 12 months, an increase of 14 percentage points compared to 39% two years ago,  according to a survey by BNY Mellon.

The study, in which 450 large institutional investors participated, says that the jump in demand for alternatives will drive demand for new technologies and services.

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The study forecast that alternative assets under management will surpass the existing level of $7.7 trillion in 2017.

Private equity was found to have the highest share of institutions’ alternative assets allocations (26%).  Allocations to real estate, private debt and loans, infrastructure, and hedge funds were 25%, 23%, 19%, and 7%, respectively.

When asked about the two most significant trends in the alternatives space over the next 12 months, 52% of the respondents cited increased indexing while 38% cited increased asset flows from financial advisers and HNWIs.

More than two-third (68%) of the respondents said they will look to offer lower fees in the next 12 months, while 71% plan to offer greater transparency.

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BNY Mellon Alternative Investment Services global head of hedge fund services Peter Salvage said: “With new demand, the bar for seamless operational support in alternatives will get even higher. Alternative investment managers need a full and integrated range of services, including custody, cash management, accounting and administration, and investor services so they can focus on their investments rather than the details of fund operations.”