Fund buyers are favouring active managers against the current backdrop of market volatility, a study has found.
Natixis Investment Management (Natixis IM) found that more than 80% of professional fund managers believe their investment return assumptions are “realistically” achievable, despite ongoing geopolitical and economic uncertainty.
Despite this, long-term rate of return assumptions have been reduced to an average of 7.7%, down from 8.4% in last year.
After a period of increasing passive investing in recent years, more than 60% of fund managers agree that actively managed investments “outperform passive portfolios in the long run,” said Matthew Shafer, head of global wholesale at Natixis IM.
Out of 200 respondents surveyed, a growing trend toward environmental, social and governance (ESG) allocations was observed. More than two-thirds said they will increase their allocation to ESG strategies in 2019.
The research also revealed that just under half of fund buyers plan to decrease their allocation to US equities, while nearly 40% of fund buyers are looking toward emerging markets as investors look for a resurgence in the asset class.
The down weighting of US stocks in favour of emerging markets reflected similar opinions toward European equities, Natixis IM said.
Rising interest rates were identified as one of the top portfolio risks in 2019, with nearly 80% of fund buyers expecting interest rates to increase during the year.
Volatility was also a cause for concern – 84% of respondents expect increased volatility in equity markets this year.
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