The Conference Board says that institutional assets are finding their way back to the levels of 2005 and 2006, before the financial crisis, according to “The 2010 Institutional Investment Report.” Assets were up 14% to $25,351.1 billion at the end of 2009, the Conference board said in a release Thursday.
Calling it “an extraordinary upward movement from the 21.3 percent plunge of 2008,” the report’s Co-author and Director of Corporate Governance Research, Matteo Tonello, added, “Of course, the historical significance of this data should also be put in context with the new economic uncertainties and the added market volatility of the last few months.”
“For decades, institutional investors have been shifting their allocation preferences from fixed-income securities into equities. Findings illustrate that in 2009, after a one-year hiatus, institutional investors resumed this trend,” stated Co-author Stephan Rabimov, an economist. He has been a co-author of this study since 2004.
The Decline in Assets
“Hit hardest” in the downturn were mutual funds, which saw outflows of 31.1% of their 2007 assets; pension funds declined 17.9% and insurance companies, 8.6% of assets, the announcement noted.
Pension funds held the lion’s share of institutional assets, with 39.9% of the total institutional pie. They hiked their share of alternative assets to 27.9% in 2009, the highest allocation to that class so far, the announcement stated. Alternatives included “real estate, private equity, hedge funds, and cash equivalents.”
At the end of 2008, institutions held $8,127.3 billion in equities, and at the end of 2009, that had increased to $10,238.7 billion. Although the dollar amount was higher, the percentage of all outstanding U.S equities held by institutions was slightly off, at 50.6%, while in the recession of 2001-2002, institutions held a higher percentage, 51.3% in equities.
By the end of 2008, the percentage of outstanding U.S. bonds held by institutions had declined to 27.3% from 34.4% in 2000, according to the release. But in 2009, the percentage increased to 28.1% of the outstanding U.S. bonds.
The full report, Research Report #1468-10-RR, can be purchased at: http://www.conference-board.org/publications/ .