Institutional investors’ main concern has shifted significantly over the last 12 months towards achieving returns and liquidity – and away from the issue of the security of investments, according to a new survey.
The poll, carried out by Union Investment and covering 107 German institutional investors, showed that the proportion citing security as their top concern dropped to 58%, down 14 percentage points from the firm’s 2017 survey.
Union Investment said this change reflected the growing pressure on investors to achieve returns.
More than a quarter (28%) of participants named achieving returns as the most important factor in investment decisions, up seven percentage points from the previous poll, and the highest ever score for this factor in the annual survey, which Union Investment has been conducting since 2005.
Liquidity has also become much more important for investors, with 14% ranking it as their primary factor in investment decisions, up from 7% in 2017.
Investors were also shown to be raising their equity quota, with allocations having nearly doubled over the last 12 months to 17% in the latest survey, from 9%.
The equity quota of investments that are managed by third-party providers was 24% in the poll, Union Investment said.
Alexander Schindler, head of institutional client business at Union Investment, said: “Growing numbers of investors are resorting to equities as a possible solution in the hunt for returns. And high liquidity levels in the equity markets add to their appeal.”
Despite challenges to fixed income holdings, the majority of respondents (57%) said they were well prepared to deal with rising interest rates.
Among the investors planning to restructure their fixed income portfolios, nearly three quarters (71%) said they favoured short duration bonds, while 56% were targeting a broader diversification within the asset class.