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Bailey McCann, Opalesque New York: Geopolitics has now become the number one concern of global institutional investors, eclipsing their fear of rising interest rates or economic slowdown, according to a recent study conducted by Allianz Global Investors.
For the first time since the AllianzGI RiskMonitor study was launched globally in 2013, geopolitical concerns top the list of risk factors for the 755 institutional investors surveyed, who represent $34.2 trillion in AUM across North America, Europe and Asia-Pacific.
Of the global investors surveyed, 44% say that geopolitics represent a major risk to investment performance - ahead of a global economic slowdown (41%) and rising interest rates (32%).
Event risk and equity market risk have also risen sharply up institutional investors' agenda over the last 12 months. 90% of respondents said that equity market risk is a top of mind issue, compared with 77% in 2016. 9 in 10 investors (91%) see event risk as a threat, compared with only three-quarters in 2016.
These changes in investor sentiment could be a boon for active managers. 65% of those surveyed said that actively managed investments play an important role in portfolios in the current market environment. Tail-risk hedging strategies are also becoming more popular, with 53% of respondents noting that they are willing to sacrifice upside potential in order to have tail-risk protection.
As they struggle to reconcile the risk-return conundrum, invest...................... To view our full article Click here
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