Pension funds and other institutional investors reduce allocations to fixed income, says survey
In a new Aeon Investments’ survey of pension funds and other institutional investors in Europe and the US, who collectively have around USD436.5 billion in assets under management, nearly one in four (23 per cent) said they have reduced their allocation to traditional fixed income assets over the past 18 months by up to 10 per cent, and half (51 per cent) said they have cut it by between 10 per cent and 15 per cent.
A further 14 per cent have reduced their exposure by more, and just 12 per cent say they have increased it. Other key findings include:
In terms of the main reasons for reducing their exposure to bonds, 61 per cent said it was because of the strong performance of equities which meant they increased their allocation to this asset class. Some 53 per cent said it was because of rising inflation and the threat of this continuing, and 46 per cent said it was due to falling valuations in fixed income assets, while 42 per cent blamed poor yields on many traditional fixed income assets.
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