An overwhelming majority of institutional investors are worried about the current low yield environment, the prospect of rising interest rates and continued uncertainty around emerging markets, according to research commissioned by NN Investment Partners. The research, conducted amongst NN Investment Partners’ panel of institutional investment managers, showed that 93 percent are concerned about the above issues, with 7 percent ‘extremely concerned’.
Three in five institutional investors (60 percent) believe that the low yield environment now means that multi-asset strategies act as a complement to fixed income portfolios, with 13 percent believing this ‘strongly’.
Valentijn van Nieuwenhuijzen, head of strategy, multi-asset, at NN Investment Partners, commented: “There is plenty for investors to worry about on financial markets but the extent of their concerns revealed by our research is quite striking. The main focus at present is on rate rises in the US but emerging markets and China in particular continue to raise issues. ”
“In the longer term, multi-asset strategies are an option for investors who recognise the difficulties posed by financial markets that are increasingly complex and require expert analysis and first-rate investment processes to navigate and deliver steady, incremental returns.”
“In a low-yield environment it is interesting that the majority also believe that multi-asset can be used as a complement to fixed income portfolios but the active stock-picking approach of such strategies applies across the asset classes.”
The research also showed that 65 percent of respondents expect institutional investors generally will increase their exposure to multi-asset strategies over the next three years, with one in seven expecting the increase to be ‘dramatic’. Investors’ strong preference for multi-asset funds is underpinned by 75 percent of respondents who view global multi-asset strategies as a good investment that adds value; 14 percent of respondents ‘strongly agree’ with this viewpoint and only 4 percent disagree.