Over half of global investors (51%) are planning to increase global equities positions over the next two years, according to Schroders’ Global Investor Insights Survey.
The survey gathered responses from almost 3,000 investors handling $74.5trn in assets across the full range of institutions.
Its other main findings included 44% planning to increase investment in active equites and 39% expecting to raise their thematic equities holdings.
Schroders said its findings indicate global investors are looking through the ‘short-term noise’ created by this year’s unusually high number of elections to harness the major trends of deglobalisation, disruption and decarbonisation.
The research found that elections, including the imminent US presidential vote, are not the biggest concern investors are wrestling with. The top three worries were the impact of central bank policy, cited by 70% of respondents, high interest rates mentioned by 68%, and a potential economic downturn pointed to by 62%.
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Private equity was another asset class respondents indicated a preference for. Of the investors taking part, 52% said they are planning to increase their exposure. For private debt the figure was 45%. Over 80% of investors questioned already invest in private markets or have plans to do so in the near term.
Johanna Kyrklund, chief investment officer, Schroders, said: “As an active manager, it is vital to remain focused on investment fundamentals and not the newspaper headlines.
“Economic activity broadly remains positive and inflation has been moving in the right direction with major central banks now cutting rates. Lower interest rates are supportive of equity values.
“The most important election is still ahead of us with Americans heading to the polls next month”, she continued. “However, it is crucial to remember that politics tends to play out in months and years, rather than days and this is what we have remained focused on; keeping it simple.
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“The results of this survey also clearly show the tension facing central banks and policy makers as almost as many respondents are as concerned about inflation risk as they are about high interest rates.”
Alex Tedder, co-head of equities, Schroders, added: “It’s interesting to note that respondents are overall quite positive on the prospects for active managers. Equity markets this year have been dominated by a small number of companies.
“This has been a global trend, but has been particularly pronounced in the US, with the technology and AI phenomenon very powerful in that market. Since July, we’ve had a reassessment amid changing interest rate expectations.
“It may be time to look at areas that have been out of favour and have become attractive from a valuation standpoint.
“Certain sectors such as utilities, REITs, biotechnology and alternative energy are potentially more interesting in this environment of lower inflation and interest rates.”
