One-quarter of U.S. public pension fund CIOs said hitting return targets in a lower-return environment is the most pressing challenge facing their funds, according to survey by Morgan Stanley Investment Management released today.
A lack of resources, and difficulty attracting and retaining staff also were cited as big challenges, said MSIM spokeswoman Erica Platt, commenting on the survey.
According to the survey, CIOs expect to increase allocations to private equity, real estate, hedge funds and non-U.S. equities over the next two years as these are viewed as the best areas to earn higher returns.
Eighty percent of survey participants identified credit risk as the most important type of risk, followed by manager risk and market risk, the survey said.
The survey was conducted in July and August with 51 CIOs of U.S. public pension funds with assets of more than $1 billion. The average fund size of the city, county and state funds represented was $21 billion.