Sovereign investors increased allocations to alternatives and emerging markets last year and expect to do the same this year despite returns missing their targets.

The Invesco Global Sovereign Asset Management Survey 2014 said that last year 51% of respondents increased exposure to real estate and 29% to private equity.

The survey said: “Furthermore, all of the major alternative asset classes (real estate, private equity, infrastructure, hedge funds and commodities) were projected to increase when sovereigns compared their forecasted asset placements for 2014 with their 2013 actuals.”

Sovereign investors wanted to increase their exposure to alternatives despite an average return of 7% in 2013. less than an 8% target. In contrast sovereigns reported returns from equities of more than than 10% last year against a target of 7%.

Invesco said: “This underperformance of alternatives suggests that increasing alternative exposure is unlikely to be driven by a tactical asset allocation strategy to boost short-term returns.”

Within alternatives, the survey found that 47% of sovereigns increased exposure to global infrastructure last year compared to 22% in 2012. This year 53% of sovereigns expect to increase global infrastructure allocations.

The appetite for infrastructure was driven by falling real estate yields as global demand grows, the belief that the size and long-term nature of infrastructure investments matches sovereign objectives and a broad consensus that risk-adjusted returns were likely to remain attractive.

Invesco surveyed 52 sovereign investors including leading state pension funds and central banks with meaningful investment portfolios.The fund manager worked with independent strategy consultants NMG to interview chief investment officers or strategy unit executives.

This year sovereigns also expect to increase their allocations to Africa, Latin America, China, India and emerging Asia as they are underweight in emerging markets relative to their strategic asset allocation targets.

“The fact that emerging market equities underperformed developed market equities during 2013 did not offset this long-term structural trend to emerging markets,” Invesco added. “We note that allocations to Central Eastern Europe and Russia have declined on a net respondent view basis in 2013 due to the crisis in Ukraine.”

Invesco’s findings are in line with the 2014-2016 strategy report released this week by Norway’s sovereign wealth fund. The fund is currently one of the largest single-owner funds in the world with assets of more than 5,000bn Norwegian krone ($815bn).

The Norwegian fund said in the report that it would increase investments in real estate, private equity, infrastructure and frontier markets.

In its strategy report the Norwegian fund said it is aiming to build a global, but concentrated, real estate portfolio.

The report said: “Our US investments will be concentrated in New York, Washington D.C., Boston and San Francisco. in Europe, investments outside London and Paris will be selectively extended. In the course of the strategy period we will also consider investment opportunities in global cities outside Europe and the US.”

The fund expects to invest 1% of assets in each of the next three years in private real estate as it develops its funding structure of absolute return strategies.

The report said: “These strategies will be expanded in size and scope from the investment today in environmental portfolios, frontier markets, and listed real estate and infrastructure. The macro driven real return portfolios will be expanded.”

New frontier markets will be added to the fund’s equity investments and the scope of fixed income will be expanded to include additional currencies.