The majority of institutional investors are maintaining their current risk exposure as they await clearer direction from markets in 2016, according to the latest NN Investment Partners’ Risk Rotation Index. The survey of global institutional fund managers reveals that more than half (56 percent) of the panel say that their risk appetite has remained the same over the previous six months.
Just under a third (28.8 percent) of the panel say that they have increased their appetite for risk over the previous six months versus 15.4 percent who say that it has decreased, leaving overall net risk appetite at +13.4 percent. This margin is higher than in the previous quarter, when 28.3 percent of investors had increased their appetite for risk and 18.3 percent decreased it, leading to an overall net risk appetite of +10 percent.
Investors believe the biggest threat to their portfolios is a crisis in emerging markets, which was cited by 33 percent of investors), followed by a black swan event (25 percent) and a eurozone crisis (22 percent). One in seven (13 percent) investors rate a black swan event as a ‘significant’ risk, highlighting the uncertainty around markets as they enter Q1 2016.