Institutional investors in Asia are seeking to de-risk their portfolios, according to a survey by Nuveen. In line with the global trend, the region is looking to shift exposure away from equities into high-quality fixed income.
Globally, economic uncertainty is on the rise with various concerns ranging from slowing growth to geopolitical tensions. Within Asia Pacific, 63 percent of institutional investors say that we are now in a «new market regime» that is reshaping the approach to managing risk and return, according to a recent survey published by Nuveen.
78 percent of respondents noted that the ultra-low interest rate era is over and the market is entering a «higher-for-longer interest rate environment».
Portfolio Shift
As a result, 44 percent of investors in the region are seeking to de-risk by decreasing equity exposure, compared to just 37 percent who will increase exposure to the asset class.
The shift favors high-quality debt with 44 percent in APAC saying they plan to increase allocations to investment-grade fixed income, «likely reflecting investor expectations regarding a coming economic slowdown», Nuveen said.
Private Market Interest
Demand in fixed income includes the private credit market. This year, 59 percent of APAC institutional investors plan to increase allocations to private markets, including private credit and private equity, though this is notably lower than last year’s 79 percent.
Nuveen's fourth annual «EQuilibrium Global Institutional Investor Survey» is based on responses from 800 institutional investors that manage $18 trillion of assets.
