More than 62% of investors are of the opinion that Central bank policy decisions will be the primary factor driving global markets in the next three years, says an annual report released by CREATE-Research and commissioned by Principal Global Investors.
The report, now in its fifth consecutive year, surveyed over 700 asset managers, pension plans, pension consultants, fund distributors and fund administrators from 29 countries with a combined AUM of US$27.4 trillion and was followed by 100 interviews.
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The report revealed that 66% respondents wanted asset managers to prioritize a deeper understanding of the debt crisis and its hidden risks and opportunities.
The report noted that 49% investors would prefer an integrated solution for asset allocation, manager selection and investment options.
The respondents factored a parallel shift into defined-contribution (DC) plans in response to personalization of risk. Today, DC plans hold 43% of global pension assets. By the end of this decade, this share is expected to exceed 60%.
The transition has already prompted asset allocation strategies to evolve. Survey respondents identified a shift to real assets — the biggest single change from this annual study’s 2012 edition.
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By GlobalDataNearly half (45%) of survey participants believed that DC investors will pursue a dynamic asset allocation strategy over the next three years. 62% of DC investors themselves reveal they would choose to pursue balanced/multi-asset class funds.
The authors of the report opined that DC plan members will increasingly distinguish between beating the market and meeting their needs, defined as the most enduring legacy of the 2008 crash.
DB members will continue to move away from diversification strategies that target returns and move toward outcome-oriented investing, the report said.
Barb McKenzie, COO of Principal Global Investors, said: "Institutions are also more focused on matching their liabilities in order to reduce risk and are worried more about the impact of inflation on their portfolio than at any time in recent memory. As a result, the move toward real assets to protect against inflation is underway.
"The asset management industry will need to assist plan sponsors and financial intermediaries with how to communicate investment expectations for this new generation of solutions-oriented products," McKenzie added.
