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Laxman Pai, Opalesque Asia: Large institutional investors, including sovereign wealth funds, are moving toward less risky markets and strategies amid rising inflation and geopolitical uncertainties, said a study.
A new report from State Street and the International Forum of Sovereign Wealth Funds (IFSWF), revealed that institutional investors' risk appetite in 2021 turned negative in early February 2022 and reached its lowest point in two years.
This is based on State Street's Behavioural Risk Scorecard, an aggregate measure of risk appetite derived from the capital flows and holdings of institutional investors across multiple asset classes and factors.
The report found that capital flow decisions became more broad-based in 2021 and found that risk-off behavior occurred across investors' equity, fixed income, foreign exchange, and asset allocation decisions.
According to the report, strong capital outflows in fixed income from emerging markets, the largest level of selling in the past five years, due to heightened geopolitical risk.
Neill Clark, head of State Street Associates, Europe, Middle East, and Africa (EMEA) said: "As economies around the world emerged from the long shadow cast by the COVID-19 pandemic, investors are faced with new risks. Today, risk assets are re-pricing due to international conflict, inflation, and central bank policy responses."
"Following a period of opportunistic rebalancing and selective risk-taking during 2020, the past y...................... To view our full article Click here
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