bfinance

Private market investments have become overweight in institutional portfolios following this year’s substantial declines in public markets. Half of investors are waiting “as long as necessary” for this dislocation to subside. The other half is concerned, a new survey by Bfinance shows. The report is of particular interest to Luxembourg, where interest in private assets and alternative investments has increased significantly in recent years.

While defensive equity strategies have provided protection during previous downturns, this year’s results have been disappointing in some cases. In particular, strategies with a quality growth style have done considerably worse than the market. 

The NATO-Russia dispute over Ukraine is fought on many boards at once. In addition to the threat of a ground war, disinformation campaigns and cyber attacks are deployed. The financial sector is particularly vulnerable. Attacks on financial service providers have increased sharply during the last two years. Asset managers are far more vulnerable than they often realise.

During negotiations on the fee that asset managers charge institutional investors for the management of a mandate, providers give an average discount of 5 to 15%. However there is no transparency about the average price that providers actually charge for mandate management, explained Duncan Higgs and Kathryn Saklatvala, following the publication of their research into fund house fees last week.

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.