A majority of investors think the market environment is favourable to active management, research has found.
Over 60% of a sample said actives would provide better risk-adjusted returns than passive investments in an environment where nearly 70% of the investors were concerned about geopolitical risk.
Natixis Global Asset Management surveyed decision makers at 500 institutional investment firms and found that while there were still concerns over fees and closet-indexers, over three-quarters of respondents said they were willing to pay a higher fee for potential outperformance of an active manager.
Institutions predicted allocations to passive products to fall from 43% last year to 34%.
The survey found that volatility topped the list of concerns for investors and that, as well as geopolitical risk, there were also concerns about the US election result and the outlook for interest rates.
Investors also expected emerging markets to perform well in 2017 and viewed US stocks and medium-long term bonds as areas for potential disappointment.
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