Pension fund megatrends: getting more holistic
The 300 largest pension funds in the world together had 21,700 billion US dollars under management in 2020. An increase of 11.5 percent, according to a study by Willis Towers Watson, in cooperation with the American platform Pensions & Investments. Prevailing trend: becoming more complex, but above all more holistic.
Forecasting: fund managers smaller in equities
Fund managers consider it less and less likely that the economy will continue to grow in the coming period. Normally, this uncertainty about future growth is a reason for investors to reduce their equity exposure.
“This can cause downward pressure on equity markets,” Jeroen Blokland, of independent investment research firm True Insight, concluded in his Daily Insight on Wednesday, based on the latest Bank of America’s Global Fund Manager Survey.
Institutional investors preferring hedge funds
Institutional investors are increasingly turning to hedge fund strategies in response to low bond yields and high-priced equity markets. Some investors are building hedge fund allocations for the first time, while a second group is refining and improving existing hedge fund allocations, according to international independent investment consultancy bfinance in a recent report.
The research firm notes that hedge fund portfolio construction has changed against a backdrop of increased uncertainty, given the pandemic and its macroeconomic consequences.
Return expectations differ between private vs professional investors
Private investors expect to achieve significantly higher returns compared to professional investors. The ‘expectation gap’ worldwide is currently 174 percent in the long term. This is 53 percentage points more than in 2020.
This was shown in research by Natixis Investment Managers among 8,550 individual investors. A large proportion of the investors surveyed, all with more than USD 100,000 in investable assets, achieved double-digit returns in 2020. The majority of them are also very positive about 2021.
Momentum score value stocks could boost style rotation
The momentum score of value stocks is on the rise as a result of the recovery of financials, energy and a strong performance of the basic materials sector. If value stocks become momentum stocks, this could give an extra boost to the style rotation that has started since November last year.
Morningstar’s Jeffrey Schumacher discussed momentum investing in a contribution to Investment Officer and Fondsnieuws.