According to Schroders’ annual Global Investor Insights Survey, released today, global investors are reshaping portfolios as geopolitical uncertainty and market concentration drive a reassessment of traditional asset allocation and reinforce the case for active management. The survey covered more than 1000 institutional investors, wealth managers and other intermediaries globally, with combined assets under management of USD 72 trillion.
Some 85 per cent of investors expect greater market volatility over the next year and they are now building greater resilience and diversification into portfolios. The survey found that conflict in the Middle East (69 %) and uncertainty surrounding US foreign policy and global leadership (67 %) were the leading geopolitical concerns for investors.
Some of the key priorities among investors are diversification (84 %) and downside protection/capital preservation (83 %). One number that stands out is that sustainability outcomes is only mentioned by a quarter of investors as a primary portfolio objective.
Almost half of investors (47 %) said they are increasing geographic diversification outside the US. Investors are also expressing strong conviction in the role of active management. Some 85 % of investors are confident it can help achieve investment objectives over the next 12 to 18 months and more than a third of investors (38 %) said they are increasing allocations to active management specifically to reduce index concentration risk.
Johanna Kyrklund, Group Chief Investment Officer at Schroders, said:
“In an increasingly volatile world, investors are reshaping portfolios to put diversification and resilience front and centre, while also juggling geopolitical risk. It is telling that in these circumstances, an overwhelming 85 per cent of investors expressed confidence that active managers can help achieve those objectives in the next 12 to 18 months. In recent years we have moved from a globalised world prone to deflationary shocks to a geopolitically fragmented world, where restructuring of supply-chain can contribute to inflationary shocks. The ability to be selective, manage risk and respond dynamically to fast-moving market conditions is our active edge to navigating these choppier waters.” The survey also found that active exchange traded funds (ETFs) are becoming more prominent within portfolios as investors see them as driving diversification (49 %), satellite or tactical positioning (42 %) and risk management (33 %). Lower costs relative to active mutual funds were identified by a majority of investors (70 %) as the primary attraction of active ETFs. Investors also highlighted intraday liquidity and trading flexibility (51 %), improved secondary market liquidity (43 %) and greater portfolio transparency (41 %) as important benefits.
Complete results from the survey here (link to external website).
According to Schroders’ annual Global Investor Insights Survey, released today, global investors are reshaping portfolios as geopolitical uncertainty and market concentration drive a reassessment of traditional asset allocation and reinforce the case for active management. The survey covered more than 1000 institutional investors, wealth managers and other intermediaries globally, with combined assets under management of USD 72 trillion. Some 85 per cent of investors expect greater market volatility over the next year and they are now building greater resilience and diversification into portfolios. The survey found that conflict in the Middle East (69 %) and uncertainty surrounding US foreign policyIf you’re new to Tell Media Group, create an account.
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