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Investors Turning to Private Assets for Resilience

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Stockholm (HedgeNordic) – Schroders has released the findings of its annual survey conducted among institutional investors, shedding light on how 770 major investors with a combined $34.7 trillion in assets are responding to the current macroeconomic environment. The study reveals that, with inflation and geopolitical uncertainties remaining pressing concerns for investors, many continue to be drawn to private assets as a means to navigate the evolving macroeconomic landscape and add resilience to their portfolios.

The results indicate that more than half of investors expect that the greatest impact on their portfolio performance over the next 12 months will come from geopolitical uncertainty and rising inflation. The factors contributing to the potential for sustained high inflation include the 3Ds of decarbonisation, changing demographics and deglobalisation. These macroeconomic themes are prompting investors to reevaluate their portfolio allocations, with a third of respondents contemplating increasing their allocations to private assets over the next two years, recognizing their role as a source of diversification.

“…many investors continue to be drawn to private assets as a means to engage with the evolving macroeconomic landscape, as well as to add resilience to portfolios.”

“This year’s study shows that investors have grown less certain. Confidence levels have taken a knock from unstable, unpredictable geopolitics, and the delicate task facing central banks of cooling inflation without unwanted side-effects,” highlights Nils Rode, Chief Investment Officer at Schroders Capital. “What is clear from the study results, is that many investors continue to be drawn to private assets as a means to engage with the evolving macroeconomic landscape, as well as to add resilience to portfolios,” emphasizes Rode. 

Around half of the global investors in the survey believe that infrastructure and renewables are best positioned to capture the investment opportunities stemming from decarbonisation trends in the medium term. With this asset class poised to benefit from the green technology revolution, 41 percent indicate their intent to increase allocations to infrastructure over the next 12 months.

“Private equity, private lending and real assets – both infrastructure and real estate – were the areas investors said they were most likely to add to in the coming year and beyond.”

“Private equity, private lending and real assets – both infrastructure and real estate – were the areas investors said they were most likely to add to in the coming year and beyond,” adds Rode. “Thematically, investors are aware that private assets are plugged directly into durable trends of disruption and progress that will be catalysed by rapid improvements in AI tech, the ongoing energy transition and decarbonisation, as well as demographic change,” he continues. “The report also highlights investor engagement with deglobalisation trends that – supportive of companies with localised supply chains – also reinforce private asset allocations.”

Find more insights from the Schroders Institutional Investor Study 2023.

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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