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Laxman Pai, Opalesque Asia:

Institutional investors expect to increase allocations to active investment strategies. Actively managed funds are poised to scoop up market share as institutional asset owners hunt for returns in gyrating markets, said a study.

According to the Cerulli Edge-U.S. Monthly Product Trends, which analyzes mutual fund and exchange-traded fund (ETF) product trends as of January 2023 with a special focus on institutional investors, a little over one-quarter of institutional asset owners indicated they would increase their allocation to active equity strategies over the next two years.

Meanwhile, 20% of respondents surveyed in the latter half of 2022 stated they would augment their fixed-income strategy allocations during the same period.

The gap between active and passively managed funds hit new lows in December 2022; however, according to a Cerulli survey, most institutional investors still want a majority of their portfolios to be actively managed.

A noteworthy number of institutional investors indicate increasing their allocations to active strategies in equities (28%) and fixed income (20%). Of those institutional investors that indicate an expansion in the use of active equity strategies, nearly one-third (32%) expect to increase their allocations to U.S. equity.

While mutual funds experienced $1.9 billion of overall outflows to start 2023, some asset classes have gathered positive net flows to start the year, data shows.

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