MPG: Institutional investors rebalance portfolios to fixed income

15 oktober 2024

Asset Allocatie Obligaties Aandelen

New research from Managing Partners Group (MPG) reveals that over the next 18 months, pension funds, insurers, family offices and wealth managers are planning on locking in gains from strong equity performance to rebalance portfolios to fixed income as they are anticipating high levels of volatility in equity markets.

Research among global institutional investors and wealth managers found almost nine in 10 (88%) predict there will be an increase in pension funds and other institutional investors locking in gains from strong equity performances to rebalance portfolios to fixed income over the next 18 months. Of these 5% say this trend will increase dramatically and 12% say it will stay the same as it is today.

MPG’s survey of global institutional investors and wealth managers with total assets under management of €136 billion under management found that more than nine in 10 (91%) predict equity markets will experience high levels of volatility over the next 18 months and of these, 96% think this volatility will lead to investors increasing their allocation to fixed income. Less than one in 10 (8%) predict the levels of volatility in equity markets will stay the same as it is today.

Sentiment is so strong that almost all (95%) institutional investors surveyed agree that we’re entering ‘the decade for fixed income’, in the same way as the last decade was for equities, the study by MPG which runs the Melius Fixed Income Fund found. Around a third (31%) strongly agree that we’re entering ‘the decade for fixed income’.

With the current and expected market volatility, almost all (95%) of those surveyed expect active bond strategies – such as fixed income bonds – to outperform passive ones in the next five years. Almost all (98%) of those surveyed also agree with the view that high yield credit will outperform US stocks over the next five years, with around a third (30%) strongly agreeing with this view.