Institutional investors globally will look to restructure their fixed-income portfolios this year in response to rising interest rates, according to an annual forecast survey from Casey, Quirk & Associates and eVestment.
All institutional investors, including investment consultants, said rising interest rates were the biggest concern for the year, and 48% expect to restructure their fixed-income portfolio, particularly corporate pension funds adopting liability-driven investing.
“One fascinating thing is the continued focus on fixed income,” said Benjamin Olmstead, vice president of new product innovation at eVestment. “Even as equity markets are at all-time highs, I still see most clients, consultants and plans focused on fixed income … and a lot of new strategies.”
There is also continued “anti-home-court bias” among institutional investors, Mr. Olmstead said. More money is expected to flow into global equity and bond strategies than to domestic allocations, as institutional investors can still get exposure to domestic markets through the global allocations.