It’s time to turn to active management, according to a survey of institutional investors by Natixis Investment Managers.
Three-quarters of respondents said the current environment favors active management. Meanwhile, allocations to passive strategies declined for third consecutive year.
At the same time, institutional investors are placing greater faith in both equities and uncorrelated, alternative investments to help them ride out market challenges. Sixty-four percent of institutions said fixed income no longer fulfills its traditional risk management role in portfolios, while 60% believe traditional assets in general are too highly correlated to provide distinctive sources of return.
More than three quarters of respondents said that using alternatives more is an effective way to manage risk. Within alternatives, there is also an appetite for illiquidity, as 74% believe potential returns make such investments worth the risk associated with fixed timeframes. Private equity is the most popular example, with 39% of institutions increasing their PE investments; 67% are satisfied with the performance of such investments in their portfolio.
Natixis surveyed 500 institutional investors worldwide.
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