Over half of institutional investors believe current environment unlike anything seen before

Written by Adam Cadle

15/05/2023

More than half (56%) of global institutional investors recognise that the current environment is unlike any they’ve seen before, with 59% either actively rethinking their portfolio strategy or reallocating to a greater degree than they typically do, a survey by Nuveen has revealed.

Twenty-seven per cent said they were making changes to their strategic asset allocation and 38% to their tactical asset allocation.

On the issue of geopolitical tensions, 74% of those surveyed said geopolitics are much more influential for their portfolio strategies now than at any point in the past three decades.

Sixty-four percent of investors said they are planning to increase their inflation-mitigation efforts in their portfolios in 2023. The majority of investors are expanding their search for yield, with 47% revisiting traditional and/or opportunistic fixed income and 41% looking at alternative credit.

The survey revealed that 72% of investors plan to increase their private markets allocations over the next five years, and 58% plan to increase their allocations to infrastructure over the next two years.

Furthermore, 83% of investors consider or plan to consider climate risk when making investment decisions, and 74% consider or plan to consider the environmental and societal impact of their investment decisions.

Almost three-quarters (74%) of investors globally consider or plan to consider the impact of their investment decisions on the environment and society. Of this group, 61% agree that impact investments will be an increasingly important allocation for them in the coming years. But return expectations remain an issue. While almost half (45%) of investors who consider impact when making investment decisions expect to get the same returns from an impact investment as they would from a comparable traditional investment, the jury is still out for about one-third (32%) of investors.

Nuveen and CoreData surveyed 800 institutions globally spanning North America (NORAM); Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC) in October and November 2022. Survey respondents represented organisations with assets of more than $10bn (58%) and less than $10bn (42%), with a minimum asset level of $500m. Twenty-four per cent of those surveyed were insurers.

Related Articles