Global investors are drowning out short-term noise caused by a global election cycle and instead focusing on major trends such as deglobalization, disruption and decarbonization by increase both listed and private equity exposures, a Schroders survey said.
The money manager’s latest Global Investor Insights Survey, which polled almost 3,000 investors with more than $74.5 trillion in total assets, found the impact of central bank policy, high interest rates, and a potential economic downturn were top concerns for investors, at 70%, 68% and 62%, respectively.
Private markets remain on investors’ radars, with more than 80% already invested or planning to do so in the near term. More than half (53%) of respondents want to up allocations to private equity in the next year, followed by private debt (42%) and renewable infrastructure equity (45%).
When it comes to national policymaking, global alliances on politics and trade would most likely affect investors’ positioning (44%), followed by high levels of government borrowing (35%).
Despite the upcoming U.S. election in November, 53% of North America and Bermuda-based investors said global elections were “short-term noise” and that they remain committed to long-term investment strategies.
That compares with 43% of U.K.-based investors — who voted in their own general election in July and saw the first change in government in 14 years — and 38% of Europe, Middle East and Africa-based investors. Overall, 41% of investors said elections were short-term noise.
However, 30% of investors have adopted a more defensive or risk-off investment profile amid heightened uncertainty caused by global elections; 28% of all investors think opportunities have been created and have moved to increase exposure to alpha-generating or higher-risk assets.
Just over half (51%) of respondents expect to increase global equities allocations in the next two years, while 44% want to raise their active equities exposure. Thirty-nine percent are looking at thematic equities.
“As an active manager, it is vital to remain focused on investment fundamentals and not the newspaper headlines,” Johanna Kyrklund, CIO at Schroders, said in a news release. “Economic activity broadly remains positive and inflation has been moving in the right direction with major central banks now cutting rates. Lower interest rates are supportive of equity values.”
Kyrklund said that while the upcoming U.S. election was “the most important election … it is crucial to remember that politics tends to play out in months and years, rather than days and this is what we have remained focused on; keeping it simple.”
The research was conducted in June and July among 2,830 investors. About 35% were based in EMEA, 28% in Asia-Pacific, 21% in North America, 10% in the U.K., and the remainder in Central and South America.
Last year’s study covered 770 investors with a total $34.7 trillion in assets.
Schroders had $978.1 billion in assets under management as of June 30.
