The global pandemic continues to significantly impact investment strategies among global asset managers, according to new research from Clearwater Analytics (CWAN).
A poll of over 140 asset managers and owners representing more than USD5 trillion in AUM showed more than a third of investors investment strategies will change this year in response to Covid. The study asked how investment strategies had changed since the start of the pandemic, and how this compares to what they have planned for 2022 in the wake of the recent omicron surge.
At a macro level, 58 per cent of companies reported making changes to their strategy two years ago, albeit only 13 per cent said the change was material. Looking forward from today, 33 per cent plan further changes to their strategies and 5 per cent said they will be material changes.
The research also showed that 45 per cent increased portfolio liquidity, while only 7 per cent decreased. Most investors held steady on fixed income duration, but a meaningful 27 per cent decreased and 16 per cent actually increased duration. The percentages were similar for credit quality, with 25 per cent increasing and 7 per cent decreasing quality.
Conservatism was evident on exposure to Covid hit sectors like retail, with 31 per cent moving away, however 6 per cent saw a buying opportunity. Equity allocations went up for 28 per cent, almost double the number decreasing allocations – with investors taking advantage of what became historic buying opportunities.
A small percentage, 14 per cent, plan to increase portfolio liquidity. An equal number of companies planned to either increase or decrease fixed income duration at 12 per cent each. However, a similar number of companies plan to improve credit quality, with only 5 per cent planning to decrease it – an approach more consistent with rate increases. Despite the historic run-up in equity markets, 15 per cent of companies plan to increase their allocation in 2022, with only 8 per cent taking money on the table.
