Institutional investors’ top priority in the current inflationary environment is the search for uncorrelated assets, said a new survey from CoreData Research.
In the survey of 378 global investors conducted in November, 37% of respondents said diversifying into uncorrelated assets is one of the most important elements of portfolio design in the current environment.
Thirty-one percent each of respondents said the use of skilled active managers and the generation of sufficient yield without adding too much risk are currently among the most important elements of portfolio design. Multiple answers were accepted.
When asked what provides the biggest risk to their investment portfolios over the next 12 months, inflation had by far the highest response, with 34% of global respondents citing it, followed by 12% saying central bank tapering was the biggest risk, 11% saying an asset bubble bursting in developed markets, and 10% saying the impact of rising interest rates on bond markets.
The perception of inflation as the biggest risk to investment portfolios was the highest among North American respondents, with 40% citing it.
“Institutional investors are putting their faith in active management as they look to navigate today’s uncertain and inflationary backdrop using uncorrelated diversifiers,” said Andrew Inwood, founder and principal of CoreData, in a news release Tuesday on survey results. “This is a real vote of confidence for active managers who now have an opportunity to demonstrate their ability to both provide downside protection and generate uncorrelated alpha in testing market conditions.”
Survey respondents were investment executives at corporate and public pension plans, insurance companies, foundations and endowments, and sovereign wealth funds. The total assets of survey respondents was not available.