{"id":60420,"date":"2017-02-03T01:08:51","date_gmt":"2017-02-03T00:08:51","guid":{"rendered":"http:\/\/beta.next-finance.net\/note\/institutional-investors-put-cash-to-work-in-2017\/"},"modified":"2017-02-03T01:08:51","modified_gmt":"2017-02-03T00:08:51","slug":"institutional-investors-put-cash-to-work-in-2017","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/note\/institutional-investors-put-cash-to-work-in-2017\/","title":{"rendered":"Institutional investors put cash to work in 2017"},"content":{"rendered":"

Large institutional investors are set to put cash to
\nwork in 2017, a BlackRock survey has found. One in four (25%) institutions surveyed intend
\nto decrease their cash allocations during the year, nearly twice as many as those who plan to
\nincrease their cash holdings (13%). The survey shows a clear trend that this cash will be
\ndeployed in 2017, with institutional investors anticipating making significant shifts to less liquid
\nassets. Investors are also increasingly considering high yielding, non-traditional asset classes.<\/strong> <\/em><\/p>\n

The survey of 240 institutional clients globally, representing over $8 trillion in assets, explores
\nhow these investors plan to rebalance assets in 2017, and was one of the first polls of
\ninstitutional investor sentiment following the election of Donald Trump as U.S. President in
\nNovember. Over the last three years, the survey has highlighted that institutional clients are
\nincreasingly shifting into less liquid assets, a trend that has continued this year.<\/p>\n

\u201cThe recent equities rally has been more than off-set by years of low rates and many
\ninstitutions are still suffering from underfunding. In the past year, investors have been
\nchallenged by global equities underperformance and negative fixed income returns. On top of
\nthis added pressure to deliver returns, reflation is set to take root this year and could well be
\nthe final prompt that institutions have needed to rethink their cash allocations and views on
\nrisk. The tide of institutional investor interest in less liquid assets is turning into a wave, with a
\nsignificant uptick in allocations anticipated as they seek alternative ways to generate returns
\nand income,\u201d<\/em> commented Peter Nielsen, Head of the Continental European Institutional Client
\nBusiness at BlackRock.<\/p>\n

Less liquid assets favoured<\/strong><\/p>\n

Real assets[[Real Assets (Infrastructure; Commodities; Timber; Farmland; etc.)]] are anticipated to be the largest beneficiaries of institutional asset flows in 2017, with 61% of those surveyed expecting to increase their allocations here. Only 3% of investors plan to decrease allocations.
\nOn a net basis, taking into account increases minus decreases, 58% of institutional investors globally will be increasing allocations to real assets. This
\ncompares to 49% (net) who expected to increase their allocations in 2016.<\/quote><\/p>\n

Investors across all regions are planning increases to real assets in 2017, with the most
\nsignificant increases expected from Continental Europe (69% net) and the UK (63% net) where
\napproximately two thirds of investors expect to up their allocations. This is closely followed by
\nAsia Pacific (APAC) with 63% net. Over half of institutional investors in the US & Canada
\n(+53% net) and over a third of those in Latin America (36% net) expect to increase exposure
\nto real assets.<\/p>\n

Real estate is also set to see significant interest, with 47% of investors globally looking to
\nincrease allocations to the asset class, and only 9% looking to decrease allocations (+38%
\nnet). The most significant increases are expected to be seen in APAC (+61% net), followed by
\nContinental Europe (+56% net). Over two fifths (+42% net) of Europe, Middle East and Africa
\n(EMEA) investors will increase their real estate holdings, closely followed by Latin America
\n(+39% net) and the US & Canada (+29% net).<\/p>\n

The outlook for private equity flows is also looking positive, with almost half of global investors
\n(48%) planning to increase their holdings, and only 13% looking to reduce allocations (35%
\nnet).<\/quote>
\n This trend is apparent across all regions. Over half of investors in APAC expect to make
\nincreases to private equity (+52% net), followed by Latin America (+47% net) and Continental
\nEurope (+44% net). Around a third of investors across EMEA and in the US & Canada will look
\nto increase their private equity holdings (+33% and +32% net respectively).<\/p>\n

Edwin Conway, Global Head of the Institutional Client Business at BlackRock.
\nadded: \u201cInstitutional investors are recognising that they need to do something different to get
\nthe investment outcomes they want. With market volatility and lower returns expected from
\ntraditional asset classes for the near future, investors are having to look elsewhere for yield.
\nThey are increasingly seeking alternative income, and are embracing less liquid strategies
\nto enhance returns. Many alternative asset classes, such as long lease property,
\ninfrastructure and renewables, are able to provide inflation protection, along with secure
\nincome streams, to take care of investors\u2019 need for cash flows.\u201d<\/em><\/p>\n

Credit exposure increasing<\/strong><\/p>\n

Within fixed income, there is a clear global trend showing a move away from core assets and
\ntowards strategies with the potential to yield higher returns. Private credit is the clear
\nfrontrunner for fixed income, across all regions and investor types, as the area where
\ninstitutions expect to increase holdings (61%), with only 4% looking to decrease slightly (58%
\nnet). <\/p>\n

Credit strategies more broadly are set to benefit from a rebalancing of assets away from core
\nand core plus (-10% net). US bank loans are expected to see an increase in allocations from
\ninvestors (26% net), followed by high yield (23% net), securitized assets (22% net) and
\nemerging market debt (19% net).<\/quote><\/p>\n

Looking at fixed income allocations as a whole, there are some significant variations by region.
\nWhile institutional investors in APAC and the US & Canada expect their allocations to remain
\nbroadly flat, those in Europe expect theirs to decrease. This is driven mainly by investors in
\nContinental Europe where 43% (net) expect to reduce their fixed income exposures.<\/p>\n

Allocations to hedge funds on the decrease<\/strong><\/p>\n

Globally, corporate pensions are decreasing their allocations to hedge funds (-22% net),
\nespecially in the UK and the US, and moving towards long duration bonds, likely pointing to
\nde-risking trends. Insurers are also following suit, with a decrease of 12% in allocations to
\nhedge funds globally, and increased favorability towards real assets and real estate. Latin
\nAmerica proves to be the only exception on a regional basis, with moves expected into private
\nequity (+47%), real assets (+36%), real estate (+39%) and hedge funds (+31%). <\/p>\n

Active and passive equity allocations<\/strong><\/p>\n

Globally, one in four investors (28%) intend to increase their allocations to active equities
\nrelative to passive equities, with over half (55%) planning to keep their current mix of active
\nand passive strategies constant. <\/p>\n

17% intend to increase their allocation to passive strategies.<\/p><\/blockquote>\n

In terms of equity allocations overall, the shifts differ substantially by region and client type.<\/p>\n

The US & Canada is the only region in which institutional investors overall expect to reduce
\ntheir equity holdings (-34% net), largely driven by corporate pension plans. In contrast over a
\nthird of institutional investors in Latin America expect to increase their equity allocations (+36%
\nnet). Around two fifths of investors in APAC (+21% net) and Continental Europe (+18% net) anticipate making increases. Across EMEA a marginal 2% (net) of investors will increase their
\nequity holdings.<\/p>\n","protected":false},"excerpt":{"rendered":"

Large institutional investors are set to put cash to work in 2017, a BlackRock survey has found. One in four (25%) institutions surveyed intend to decrease their cash allocations during the year, nearly twice as many as those who plan to increase their cash holdings (13%). <\/p>\n","protected":false},"author":20,"featured_media":60418,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1481],"tags":[1809,1655,1651,1724,1776,2091],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/60420"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=60420"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/60420\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/60418"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=60420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=60420"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=60420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}