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Alternative Market Briefing

Institutional investors add risk assets back into portfolios, says study

Friday, April 02, 2021

Laxman Pai, Opalesque Asia:

Sovereign wealth funds and other institutional investors added risk assets back into portfolios as the COVID-19 pandemic lingers, said a study.

A report by the International Forum of Sovereign Wealth Funds (IFSWF) and State Street found that investors have gradually deployed some of their accumulated cash and reduced fixed income positions to add exposure to risk assets, while financial markets rebounded during the pandemic.

"Institutional risk sentiment across asset classes has also broadly improved during the period up to March 2021, particularly for foreign exchange, commodity-sensitive assets, and equity reallocation decisions," the study said.

Many are also adding to their exposure within private markets, with a particular focus on infrastructure and real estate, hastened by low real returns in public markets, according to the findings, based on State Street data and an IFSWF survey of seven of its largest sovereign fund members.

SWFs in private markets more than doubled during 2020 to $50.3 billion in part due to funds helping out their portfolio companies hit by the pandemic, revealed IFSWF data.

Investors started 2021 with a more neutral stance across asset classes than the underweight positions in risk assets they held in 2020, the report said.

Cash levels still remain high but "there is evidence of a sustained rotation from cash and fixed income into equities since July 2020," the report added.

"The latest......................

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