Double down: faced with increased volatility, institutions embrace risk

Faced with greater volatility and continued rate pressures, the 500 decision makers included in this, our fifth annual Global Survey of Institutional Investors, appear to be doubling down on their bets by increasing allocations to equities, private equities, and other high-risk assets seeking to generate returns. Institutional investors will have their hands full balancing three critical objectives:

• Managing risk – Navigating higher volatility and low yields is a risk management challenge which is compounded by more stringent solvency requirements.
• Generating returns – Institutions are not shying from volatility and will look to active management to help capitalize on opportunity.
• Managing the portfolio – Institutional investors see the need for outside help in managing more complex portfolio strategies.

Volatility and uncertainty may be the cards institutions are dealt in 2017, but they are willing to bet on positive investment outcomes. They are coming to the table with a strategy for managing the risks and have clear asset preferences. How well they play their hand will determine their success in meeting their number one goal: delivering higher risk-adjusted returns.