Independent specialist financial services consulting firm bfinance announced the results from its latest Pension Funds and Insurance Asset Allocation Survey conducted among European and North American institutional investors.
Over the next twelve months, 46% of pension funds expect a rise in their equity exposure while 35% anticipate a drop in the next twelve months, the survey results showed.
The results also impled that investor preference for fixed-income products will wane during the same period. Respondents also indicated a move toward greater diversification, favouring alternative asset classes such as infrastructure and private equity.
Overall, 44% of pension funds saw their allocation to fixed income increase since the last survey. A quarter of respondents (25%) expect an increase in their bond exposure compared with 42% who foresee a decrease over the next year. Five months ago, only 30% expected an increase, while a smaller proportion (11%), expected a decrease in their bond holdings.
A significant proportion of respondents has increased their exposure to alternative asset classes since October 2008. Twenty-four percent have increased their infrastructure exposure, while 16% increased their private equity exposure. Investors have also augmented their exposure to commodities and property (13% and 12%, respectively). The proportion allocated to alternatives has risen partly as a result of the drop in the value of core assets such as equities, creating a gap between investors strategic and actual asset allocations.