The AMP Capital Institutional Report found 45 per cent of institutional investors expect to increase their holdings in private equity during the first half of 2014.
It also found 36 per cent anticipate increasing their allocation to direct real estate and almost a quarter expect to raise their investment in direct infrastructure.
The survey found investors in Europe and the Middle East are most likely to increase their investment in direct real estate, with 59 per cent planning to raise their allocation.
European and Middle Eastern investors are also most likely to raise their allocation to private equity investment, at 56 per cent.
AMP Capital warned, however, that governance limits for investing in illiquid assets may prevent funds from increasing their allocation to alternative assets, particularly for those pension funds entering the drawdown phase.
“Two-thirds of investors have an average limit of 25 per cent on the proportion of illiquid assets they can hold and many already have an average allocation of 24 per cent,” said AMP.
The report also indicated 31 per cent of all institutional investors intend to reduce their weighting in domestic equities and 26 per cent intend to decrease their allocation to cash.
Twenty-one per cent also stated they will reduce the domestic fixed income portion of their portfolio.
The survey also showed respondents overall expect to achieve an average return of 7.3 per cent.
AMP Capital's chief executive, international, and head of global clients, Anthony Fasso, said institutional investors have uncertain expectations.
“Their concerns are based around the risks they see to the global economy, including the ongoing crisis in Ukraine, the end of quantitative easing by central banks and questions over the future direction of China’s economy,” said Mr Fasso.
“Despite this, the majority of investors surveyed expect to make no substantive change in their approach to seeking returns either through alpha strategies or by bearing more risk.”
