Strong majorities of defined benefit investment managers plan to allocate assets to passive funds, global equity funds, real estate, infrastructure and low-variance equities in the next three years. A report by CREATE-Research and Principal Global Investors says that this is part of a shift by those investors away from equities and emerging market bonds.
And it’s a marked trend since 2013. According to Pensions & Investments (free subscription required), in just two years DB investment managers’ interest in these allocations rose as follows:
- passive funds: 53% to 70%;
- global equity funds: 56% to 69%;
- real estate: 55% to 68%;
- infrastructure: 45% to 65%; and
- low-variance equities: 52% to 62%.
These changes come at the expense of allocation assets in a variety of emerging market funds, as follows:
- market equities: 45% from 52%;
- hard currency bonds: 38% from 46%;
- government bonds: 33% from 46%; and
- local currency bonds: 18% from 25%.
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