Global investors look through election uncertainties to double down on global equities and private equity

Written by Adam Cadle

21/10/2024

Global investors are looking through the short-term noise created by this year’s election cycle to harness the major trends of deglobalisation, disruption and decarbonisation by increasing their exposure to global equities and private equity, according to the Global Investor Insights Survey published by Schroders.

The survey, which encompasses almost 3,000 investors and some $74.5trn in assets across the full spectrum of institutions, instead found that the impact of central bank policy (70%), high interest rates (68%) and a potential economic downturn (62%) usurped any concerns about this year’s election cycle.

Specifically, in terms of national policymaking, investors said global alliances on politics and trade (44%), as well as high levels of government borrowing (35%), would most likely impact their investment positioning.

The trend toward global and thematic equities continues to gain momentum. More than half (51%) of respondents plan to increase their allocation to global equities over the next one to two years. They also highlight that equities are best suited to capture themes like globalisation and disruptive technologies.

In the realm of fixed income, the best opportunities vary depending on the type of investor. Nearly half (47%) of institutional investors see private credit as the most attractive fixed income opportunity over the next one to two years, while 39% of global financial advisers point to investment-grade corporate debt as their top pick.

When it comes to private markets, private equity is poised for increased allocations, with 52% of respondents globally planning to increase their exposure to this asset class. Other asset classes favoured for future allocation include private debt (45%) and renewable infrastructure equity (42%). Additionally, technological revolution (63%) and energy transition and decarbonisation (57%) are seen as the most critical themes that institutional investors and gatekeepers aim to capture through private markets.

Georg Wunderlin, CEO, Schroders Capital, said: “It is crucial to enable not only institutional but also individual investors to profit from the benefits of private markets investments. Accessibility of private asset classes has improved significantly in recent years on the back of a much greater array of fund structures aimed at individual investors. We see it as a key mission for us to continue to drive this trend."

On the topic of energy transition, institutional investors and gatekeepers cite their primary reasons for investing in the energy transition as portfolio decarbonisation and diversification (41%). Both power grid infrastructure and emergent technologies such as hydrogen, carbon capture and batteries are highlighted as the best opportunities in the energy transition space in the coming two years.

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