Market conditions a challenge for institutional asset allocation, says MFS
Institutional investors need to adjust their investment horizons and return targets to take a longer-term view through the market cycle, according to US-based MFS Investment Management (MFS).
The toughest challenge for institutional investors such as defined benefit (DB) pension plans is to optimise their risk-adjusted returns in the current market environment, according to Ravi Venkataraman, senior managing director of MFS Institutional Advisors, the institutional unit of MFS.
One of the key issues is that these investors have little understanding about how to extract yield to meet their long-term return objectives.
“We’ve seen some institutional investors in North America are expecting a 7.5% rate of return over the next five-to-ten years,” Mr. Venkataraman says in an interview with Asia Asset Management, noting that this is too high compared to the actual return on public equities.
Read full content: AAM
