A majority of professional investors are planning to add to their equity and private equity holdings to help meet retirement needs.
Fidelity International’s Professional Investor DNA Survey found over half of investors (55%) expected to increase their exposure to equity, closely followed by private assets (52%) and fixed income (24%).
The survey also found a potential decrease by these investors in their exposure to multi-asset funds (28%), cash (26%) or fixed income (21%).
The apparent rise in risk appetite stems from a ‘lack of retirement preparedness as life expectancy increases’ Fidelity said.
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Despite this rising risk of financial shortfalls in retirement, only 60% of the professional investors surveyed said they are prepared financially for longer life cycles.
Just 57% believe there are ‘sufficient quality solutions in the market’ addressing the investment needs of increasing life expectancy.
The study, developed with Crisil Coalition Greenwich, surveying over 120 institutional investors and intermediary distributors across Europe and Asia.
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Katie Roberts, global head of client solutions, Fidelity International, said: “Interestingly, the findings suggest that when planning for retirement, investors are focused on increasing their allocation to more risk-on asset classes to accumulate wealth over time.
“What this may not show is how the portfolio allocation changes when clients transition from a wealth accumulation phase to a decumulation phase in retirement. Indeed, in retirement, one might consider products that provide more accessible and flexible liquidity.
“Preparing for retirement remains complex, especially when considering the changing market environment, local specificities including regulation, pensions policy and frameworks, or age of retirement,” she continued. “In parallel investors must consider the difference between investing for retirement and investing in retirement which involves ensuring sufficient funding throughout the entire extended life cycle.
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“From an investment perspective and according to the survey, a lot of progress has been accomplished in terms of retirement readiness but more still needs to be done, particularly in terms of awareness on longevity, transition between accumulation and decumulation phases and the availability and diversity of solutions.”
