Institutional investors planning on locking in equity gains to rebalance portfolios to fixed income

Written by Adam Cadle

15/10/2024

Almost nine in 10 (88%) institutional investors and wealth managers predict there will be an increase in their industries of locking in gains from strong equity performances to rebalance portfolios to fixed income over the next 18 months, Managing Partners Group (MPG) research has revealed.

Of these, 5% said this trend will increase dramatically and 12% said it will stay the same as it is today.

Ninety-one per cent predict equity markets will experience high levels of volatility over the next 18 months and of these, 96% think this volatility will lead to investors increasing their allocation to fixed income. Less than one in 10 predict the levels of volatility in equity markets will stay the same as it is today.

Almost all (95%) of institutional investors surveyed agree that they are entering the decade for fixed income. Ninety-five per cent of those surveyed expect active bond strategies – such as fixed income bonds – to outperform passive ones in the next five years. Ninety-eight per cent of those surveyed also agree with the view that high yield credit will outperform US stocks over the next five years, with around a third (30%) strongly agreeing with this view.

Jeremy Leach, CEO of Managing Partners Group, commented: “With the current and expected market volatility our new research shows a resounding agreement among professional investors to lock in the gains they’ve made from equities and rebalance portfolios to fixed income.

“Their view is so strong that many professional investors believe that the traditional 60% equities 40% fixed incomes allocation should be dramatically revised to include a much higher proportion in bonds.”

Managing Partners Group commissioned the market research company Pureprofile to interview 100 investment professionals working for pension funds, insurance asset managers, family offices, other institutional investors and wealth managers with a total of €136bn assets under management in the UK, US, Germany, Switzerland, UAE, Singapore and Hong Kong during August 2024.

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