Fund allocators to trim U.S. equities, hike alternatives

Fund selectors' most notable planned equity shift involves U.S. equities, as 31% expected to decrease allocations in 2022, based on Natixis Investment Managers' Global Survey of Fund Selectors at wealth management, private banks and insurance companies. This is more than double the rate that planned to lower European and Asia-Pacific equities.

The overwhelming majority, 84%, claimed that low-interest rates have distorted valuations. Two-thirds were concerned that they don't reflect fundamentals and that current growth is unsustainable.

With the prospect of higher rates, fund selectors appear willing to take on additional credit risk. Among the respondents, 39% plan to decrease allocation to government-related securities. Although far from a majority, 28% and 32% intend to increase allocations for investment-grade and high-yield debt, respectively.

Beyond that, green bonds stand out, with 50% planning to increase their allocation.

Many appear willing to turn to alternative investments, particularly private equity and infrastructure. For each option, 45% claim that they will increase their allocation. Absolute return strategies also look like a popular option with 39% seeking to raise that allocation.