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Laxman Pai, Opalesque Asia: With volatility back in the mix, institutions are focused on active management, allocating 70% to active - and only 30% to passive, according to a survey released today (Wednesday) by Natixis Investment Managers.
79% institutional investors surveyed say market conditions favor active management in 2019 and 78% of institutional decision makers are willing to pay a higher fee for outperformance.
Low market volatility has helped bolster investment returns over the past ten years. But as rates rise, many expect a return to historical norms that make volatility a more significant factor, said the survey. 52% surveyed say volatility is a portfolio risk.
After ten years at or near zero, interest rates are on their way up. This presents a new risk challenge for institutions. 75% are concerned that prolonged low rates have created asset bubbles. They are more worried about the pace-rather than the size-of interest rate increases. 56% believe rate hikes will have a negative impact on performance.
Thanks to uncertain returns and rising rates in traditional securities markets, many institutional investors are turning to private markets to enhance portfolio performance, said the study. While, 72% say the returns of private equity are worth the liquidity risk, 60% say diversification is one of the main reasons they invest in private assets.
At the tail end of a ten-year bull market, institutional investors see the potential for bubbles acr...................... To view our full article Click here
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