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Bailey McCann, Opalesque New York:

Institutional investors entered the pandemic with cautious optimism. As Opalesque has previously reported, various investor surveys reported that institutions were confident of a relatively quick recovery after an initial lockdown period. However, the failure of the US to either reign in the virus or provide an adequate economic safety net appears to be tempering investor expectations heading into 2021. Data from Natixis Investment Managers suggests that institutions believe markets are underestimating the negative impact of the pandemic. Just 21% expect full economic recovery before 2022.

78% of institutional investors surveyed by Natixis think the stock market's current pace of growth is unsustainable, and they expect performance in the year ahead to be hard-won and fragile. The survey found institutional investors' long-term return assumption is 6.3% on average, a decrease of 60 basis points from 2019. Insurers cut their return assumption even more dramatically, from 6.5% to 5.5% on average.

Heading into next year, asset class allocations in institutional portfolios will remain broadly stable. However, within asset classes, investors are opting for more defensive and tactical options. According to the report, equities portfolios will pivot away from US equities and toward emerging market and Asia Pacific stocks. Bond portfolios will include a greater allocation to investment grade corporate debt and securitized loans.

71% ......................

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