(June 10, 2013) — Institutional investors globally believe they have a better handle on risk despite facing the challenges of rising volatility, inflation, and lower yields, a Natixis Global Asset Management (NGAM) survey found.
NGAM, which has $785 billion dollars in assets under management worldwide, concluded investors are favoring global and emerging market stocks, as well as real estate and private equity. When asked to project which asset class will perform best this year, the top choice was global equities (27%), followed by domestic stocks (19%), and emerging market equities (15%).
A total of 65% of investors said they were confident with their risk management approach despite believing that they will be challenged by severe market swings (75%), rising inflation (64%) and lower yields (90%).
The majority of respondents globally (60%)—and 88% in the US—believed that tradition asset allocation and portfolio management have outlived their usefulness for today’s markets. Of investment managers that participated in the study, 89% felt sure they would meet their future obligations, but respondents broadly believed (71% globally) individuals saving for retirement would fall short. US-respondents were even more pessimistic: 81% projected that retirees will not meet their goals.
Investors surveyed felt alternative assets such as hedge funds, real estate, private equity, and commodities were solid investments. Of those interviewed, 85% reported owning alternatives, and three in four said it is essential to invest in these strategies in order to diversify portfolio risk. Few investors felt the central bank or monetary policy would change their investment strategies.
NGAM conducted its 2013 institutional research study in 19 countries throughout the Americas, Europe, Asia, and the Middle East. The Boston- and Paris-based asset manager undertook 500 interviews with investment staff from private pension plans (189), public pension plans (109), sovereign wealth funds (43), insurance companies (35), endowments/foundations (18), funds-of-funds (11), and asset consultants (97).