Nuveen Survey: Institutional Investors Face Market Rethink, Turn to Infrastructure and Private Assets
The turbulent and uncertain nature of today’s economic landscape is prompting global institutional investors to make significant changes to their portfolios, with interest in alternatives almost doubling as inflation concerns grow.
That’s according to Nuveen’s, TIAA’s investment management arm, annual EQuilibrium Global Institutional Investor Survey, which found 59% of global investors are either actively rethinking or redefining and reallocating their portfolios.
Overall, 74% say geopolitics’ impact on investment strategies is more significant today than it has been over the past three decades, while 56% agree the current investment environment is like nothing they’ve ever witnessed.
Asked about portfolio strategies, most investors are either “actively rethinking” (31%) or “redefining and reallocating” (27%) their portfolios. For 48%, this means reformulating how they calculate capital market assumptions, while 38% are making significant tactical allocation changes. More than a quarter (27%) are making foundational changes to their strategic asset allocation.
“Institutional investors typically take a measured, incremental approach to portfolio changes. That makes the degree to which investors today are contemplating or making very significant changes even more striking,” noted Mike Perry, head of Nuveen’s Global Client Group.
Underpinning these rotations is a surge in alternative investments. Between 43% and 58% of investors plan to increase allocations to major alternative investment categories, up from 25% to 35% in 2020 and 2021, respectively.
Infrastructure – especially private infrastructure and infrastructure debt – is in focus with 58% of respondents planning to boost allocations. Infrastructure was also the top choice for investors in climate risk strategies.
The survey of 800 global institutional investors showed that 64% of investors are specifically zeroed in on inflation-mitigation efforts. Half of the respondents said they plan to employ an inflation-mitigation strategy for between two and three years, while 14% said they expected to do so for even longer.
