World events change investor allocations, finds BlackRock

Sold houseReal assets, such as property, are attracting more investors as they struggle to find growth – and bond portfolios also look set to be radically overhauled, according to research among institutions with $8 trillion (€7 trillion) in assets under management.

Diverging market conditions, macro-economic trends, the prospect of deflation, and geo-political uncertainty are drivers for demand for real assets and alternative bond strategies, a study of 169 clients by asset manager BlackRock, finds.

Senior investment professionals in Europe were bullish on real assets and real estate, with 69% and 66% of respondents, respectively, saying they anticipate increasing their allocation to these asset classes.

In fixed income, 47% said they would move out of core and long duration investments into unconstrained bonds. Also, 44% of the professionals would move into emerging market debt, while 47% would go into US bank loan strategies.

Investors are seeking ways to generate returns across varying market conditions, BlackRock says.

A significant body of European investors surveyed, 36%, also intend to increase their allocation to private equity and a net 9% said they would increase public equity investment (40% to increase versus 31% to decrease).

Investors based in Asia Pacific, the US and Canada gave similar responses. Again, real assets, including real estate and private equity, appear attractive in light of historically low interest rates and patchy growth in developed economies.

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