Only 56% of investors satisfied with 2022 performance, study finds

Written by Michael Griffiths

15/11/2022

Just 56% of investors are either “very” or “quite” satisfied with their overall performance so far, a new study by bfinance has indicated.

This compares to a figure of 82% when the investment consultancy conducted the research in the summer of 2020.

The bfinance survey queried 396 senior investors, whose institutions are responsible for more than $13trn in assets, based in 40 countries, to see how they have fared and what they expect for the future.

It found that most, however, do not appear to be laying the blame at the door of their strategy, such as their strategic asset allocation, with bfinance revealing that 82% are satisfied with performance there. Meanwhile, 63% are satisfied with the performance of their active managers, with frustration particularly evident in equities, and particularly emerging market equities, as well as emerging market debt.

In terms of macro concerns, 87% of respondents were concerned that inflation and rising rates will impair their ability to achieve investment objectives. That being said, the research indicated that only 43% of investors have recently made or are about to make changes that increase the inflation-sensitivity of the portfolio, while just 17% expect to do so in the coming 18 months, as fears of recession loom large.

Furthermore, ESG-related practices, including newer themes including carbon reductions and impact investing, are still on the rise. bfinance revealed that a quarter of investors are now engaged in impact investing, with a further third planning on doing so. When it comes to carbon, 32% of investors said they are reducing portfolio carbon emissions/intensity.

Head of investment content at bfinance, Kathryn Saklatvala, said: “This has been a fascinating juncture at which to carry out this biennial study. There is now no doubt that we are in a period of secular macroeconomic transition. Institutional investors are evidently concerned about inflation and rising rates, but the looming threat of recession and the steep decline in public markets this year makes the prospective choices very difficult indeed.

“The investment strategies that may provide the greatest resilience in a climate of inflation and rising rates may also be more vulnerable in a climate of recession and higher defaults, and vice versa. Private markets have initially appeared to provide more resilience, and investors are continuing the long-term trend to increase exposure to illiquid strategies, but complacency should be avoided at all costs. Investors must now navigate these ‘traps’ with care.”

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