The average allocation to cashflow-driven investments such as infrastructure, private and multiasset credit, has doubled since the beginning of 2018, according to a study by financial technology firm RiskFirst published Tuesday.
The study of 3,000 investors' portfolios with more than £1 trillion ($1.2 trillion) in combined assets found CDI assets increased to 20% of overall portfolios as of July 31 compared with 16% as of Jan. 31. In January 2018, these assets constituted only 10%.
In anticipation of a recession in the next 12 to 24 months, global investors, predominantly based in the U.K., use CDI strategies to match cash inflows on the asset side with the cash outflows on the liability side to get better returns.
Some 65% of CDI assets were obtained through buy-and-maintain credit and real estate building blocks as of July 31, down from 66% a year earlier. Real estate has also fallen in the 12-month period to 16% from 17%.
Infrastructure and private credit have increased over the year as a proportion of CDI assets to 7% and 3%, respectively, from 6% and 2%. High yield and multiasset credit were flat in the period.
In CDI portfolios, excluding real estate and buy-and-maintain mandates, investors as of July 31 allocated 33% to infrastructure, 33% multiasset credit, 16% private credit, 9% each other credit and high yield.
As of July 2018, the allocation was 34% infrastructure, 38% multiasset credit, 11% each private credit and high yield, and the rest in other credit.
"While no one knows for a fact when the next recession will kick in, our data shows that one thing is certain: CDI is not just an idea but a strategy whose time has come," CEO Matthew Seymour said in a news release. "As CDI becomes more important, ready access to asset and liability data and being aware of both broader asset and liability trends is becoming increasingly integral to both the asset owner and the growing asset manager client base."