Liability-driven investing, dynamic asset allocation strategies and more transparent investment products will be tops on the minds of defined benefit pension executives in the next three years, according to a survey by independent consultant CREATE-Research.
According to the survey, 67% of the 225 money managers running an aggregate of about $18.2 trillion in assets said DB clients will be using liability-matching products. About 61% believed clients are looking for more transparent investment processes and products, while about 51% of the respondents thought that dynamic asset allocation will be an important focus within the next three years.
DB clients will be trying to find consistent risk-adjusted returns, according to 50% of the respondents. Theyre also looking for less complex and less risky products, along with improved liquidity, according to 40% of those surveyed.
Over a span of nine years in this decade, clients of all kinds have been badly burnt by two of the four worst bear markets in the last century and are now demanding all-weather products, which place capital protection at the core, Jim McCaughan, CEO of Principal Global Investors, said in a news release about the survey. (Principal and Citi Global Transaction Services commissioned the survey.)
The latest financial crisis wiped out about $15 trillion in asset values globally, according to the survey. About 45% of the respondents expect the worst of the crisis to end sometime in the first half of 2010, with another 20% expecting the bottom to hit in the second half of 2010. About 27% believed the worst of the crisis will take place in the second half of 2009.
The survey was conducted in April.