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EQuilibrium - our global institutional investor survey

2023 GLOBAL INSTITUTIONAL INVESTOR SURVEY

EQuilibrium

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Reframing the future

How investors are rethinking markets, reallocating portfolios and responsibly investing amid dramatic shifts in the macroeconomic and geopolitical landscape

Institutional asset owners are reframing the future and preparing their portfolios for a market regime that differs dramatically from recent decades. These efforts are being driven by monumental shifts in monetary policy, rising geopolitical uncertainty, energy transition and many other forces disrupting the investment landscape.

Our third-annual research survey of 800 global institutional investors uncovers new insights into how investors expect to achieve their investment objectives.

Click the categories below for highlights from the survey.

RETHINKING MARKETS
59%
Rethinking, redefining or setting the reset button on portfolios
59%
RETHINKING MARKETS
Rethinking, redefining or setting the reset button on portfolios

Investors are actively considering major changes – or already taking action

The long-term nature of most institutional assets means that these investors have an inherent inclination toward staying the course. Institutional investors, by and large, take a measured, incremental approach to portfolio changes.

Against this backdrop, the degree to which investors today are contemplating or making significant changes is particularly notable. Only 41% are waiting it out or taking a business-as-usual approach to today’s market. The majority are actively rethinking, redefining or reallocating their portfolio strategies.

“While we're looking at the same factors, we’re trying to use a different lens to interpret them.”

— Australia, public pension, head of investment strategy

 

What changes are investors making to their portfolio strategies?

Given the current market environment for the past three years, which of the following statements best describes your portfolio strategy? (n = 800)

Chart of what changes are investors making to their portfolio strategies
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REALLOCATING PORTFOLIOS
72%
Planning to increase allocations to private investments
72%
REALLOCATING PORTFOLIOS
Planning to increase allocations to private investments

Private assets and other alternatives are poised for higher allocations

The percentage of investors who plan to increase their allocations to alternatives, and particularly private alternatives, has surged since 2020. This increase spans all alternative asset classes, from the largest, most widely held assets to more niche investments. Nearly three-quarters of investors (72%) plan to increase investments to private markets over the next five years.

“More and more of the best return-seeking assets are in private hands; it's not the public markets. And whether you agree with that or not, that's what institutions are doing.”

— U.S., private pension, investment director

 

Percentage of investors planning to increase alternatives allocations over the next two years

Which alternative investments do you plan to increase allocations to in the next two years? Multiple answers allowed. (n = 579)

Chart of percentage of investors planning to increase alternatives allocations over the next two years
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RESPONSIBLY INVESTING
71%
Prioritizing infrastructure for climate risk mitigation strategy
71%
RESPONSIBLY INVESTING
Prioritizing infrastructure for climate risk mitigation strategy

Climate risk influences most investors’ portfolio construction

More than eight out of 10 investors (83%) consider or plan to consider climate risk when making investment decisions. This drives such action as investing in new green energy opportunities, reducing allocations to companies or industries with high carbon emissions and engaging with management teams to advocate for more climate-aware policies. Investors are most frequently focusing their climate risk mitigation efforts on the infrastructure and public equity portions of their portfolios.

“It's finding companies with new solutions like wind turbine producers, but it's also working with more traditional energy companies that are switching their model to more sustainable sources of energy. … It's all aspects of the energy transition.”

— U.K., private pension, senior investment management team member

 

Priority asset classes for climate risk mitigation

Which of the following asset classes are you prioritizing as part of your climate risk mitigation strategy? Multiple answers allowed. (n = 587)

Chart of priority asset classes for climate risk mitigation
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About the survey
Nuveen and CoreData surveyed 800 global institutions spanning North America (NORAM); Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC) in October and November 2022. Respondents were decision-makers at corporate pensions, public/ governmental pensions, insurance companies, endowments and foundations, superannuation funds, sovereign wealth funds and central banks. Asset owner survey respondents represented organizations with assets of more than $10B (58%) and less than $10B (42%), with a minimum asset level of $500 million. The survey has a margin of error of ± 3.5% at a 95% confidence level.

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The views and opinions expressed are for informational and educational purposes only, as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example.

Past performance is no guarantee of future results. Investing involves risk; loss of principle is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

Risks and other important considerations

This material is presented for informational purposes only and may change in response to changing economic and market conditions. This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Financial professionals should independently evaluate the risks associated with products or services and exercise independent judgment with respect to their clients. Certain products and services may not be available to all entities or persons. Past performance is not indicative
of future results.

Economic and market forecasts are subject to uncertainty and may change based on varying market conditions, political and economic developments. As an asset class, real assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Investments will be subject to risks generally associated with the ownership of real estate-related assets and foreign investing, including changes in economic conditions, currency values, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties.

This information does not constitute investment research, as defined under MiFID.

Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.
 
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