Traditional investing principles 'not fit for purpose', institutionals say
GLOBAL – Most institutional investors around the world believe traditional investing principles have outlived their usefulness, according to a survey.
Sixty percent of institutional investors internationally said traditional portfolio construction and diversification strategies were no longer ideal for most investors, a survey by Natixis Global Asset Management (NGAM) showed.
This view was held more keenly by US investors, with 88% of respondents there agreeing with this.
John Hailer, NGAM chief executive in the Americas and Asia, said: "The old road map no longer guides investors, and the new one is being drawn every day.
"They need more tactical help with portfolio construction and asset allocation so they can build stronger, more durable portfolios that can better withstand the cycles."
The survey took in responses from 502 institutional investors in 19 countries, collectively managing around $11.5trn (€8.7trn) in assets.
They included investors linked to public and private pension funds, sovereign wealth funds, endowments and foundations, insurance companies and asset consultants.
Investors were still being drawn to global stocks, the study found, with 27% choosing global equities as the asset class most likely to perform best this year, followed by domestic stocks at 19% and emerging market equities at 15%.
This year, 58% of respondents planned to increase their exposure to global stocks, with 46% planning to add to their emerging market equity holdings and 42% to raise their domestic stocks' weighting.
Lower yields have made the risk/reward trade-off of bonds less appealing for many investors, NGAM said, with 43% of survey respondents saying they planned to scale back domestic bond exposure in 2013 and 42% aiming to cut global bond allocations.
More than 60% of institutional investors surveyed said they planned to add to their alternative investments, or other assets that did not correlate with the broader market, in the next 12 months.
Within alternatives, the most popular target areas were real estate at 41%, private equity at 36% and infrastructure at 30%.
Some 71% saw alternatives performing better this year than they did last.