78% of institutional investors to reduce exposure to traditional fixed income assets

Written by Adam Cadle

28/03/2022

Seventy-eight per cent of institutional investors plan to reduce their exposure to traditional fixed income assets over the next 18 months, new research published by Aeon Investments has revealed.

Aeon Investments published survey results of institutional investors in Europe and the US who collectively have around $437bn in assets under management, and found that 19% expect to reduce their exposure to traditional fixed income assets by up to 10%. Some 46% said they would cut it by between 10% and 15%, and 13% said they would reduce it by more than this. Just one in five investors said they expect to increase their exposure.

In terms of where they will reallocate this capital, 73% of respondents said that at least 25% would go into equities. Some 55% said they would allocate this amount to private equity, and the same said this for real estate. Half (51%) said that at least 25% of the funds they plan to take out of traditional fixed income assets would be allocated to structured credit focused investments.

Aeon Investments chief executive officer Oumar Diallo said: “The traditional fixed income market has ensured a difficult period and many investors feel this is set to continue with rising inflation and interest rates set to increase.

“In the past 18 months, our research shows 88% of pension funds and other institutional investors cur their allocation to traditional fixed income assets, and our findings suggest the majority plan to make further cuts over the next year and a half.”

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