In a new Aeon Investments’ survey of pension funds and other institutional investors in Europe and the US, who collectively have around USD436.5 billion in assets under management, nearly one in four (23 per cent) said they have reduced their allocation to traditional fixed income assets over the past 18 months by up to 10 per cent, and half (51 per cent) said they have cut it by between 10 per cent and 15 per cent.
A further 14 per cent have reduced their exposure by more, and just 12 per cent say they have increased it. Other key findings include:
In terms of the main reasons for reducing their exposure to bonds, 61 per cent said it was because of the strong performance of equities which meant they increased their allocation to this asset class. Some 53 per cent said it was because of rising inflation and the threat of this continuing, and 46 per cent said it was due to falling valuations in fixed income assets, while 42 per cent blamed poor yields on many traditional fixed income assets.
Of the funds reallocated from traditional fixed income assets to others over the past 18 months, 49 per cent of professional investors interviewed said that at least 25 per cent of it had been invested in structured credit focused investments that offer attractive yields whilst preserving capital.
Some 57 per cent said that they had allocated this amount into private equity, and the corresponding figures for commodities, real estate and equities are 49 per cent, 40 per cent and 35 per cent respectively.
