Institutional investors looking ahead to 2025 expect to significantly alter their asset allocation as a way to diversify sources of investment outperformance in part because they expect a lower return environment and market volatility, according to Fidelity Investment’s global institutional investor survey, released Monday.
Institutions with $1 billion or more in assets under management generally said they would increase their investments in active, nontraditional passive, alternatives and unconstrained strategies and derivatives.
“Institutions realize that in the long term, market activity may no longer be enough to generate returns, so they have to work smarter to reach their goals,” Jeffrey Mitchell, chief investment officer at Fidelity Institutional Asset Management, said in a statement.
“Institutions are restructuring their portfolios to reflect this changing investment ecosystem, whether by increasing allocations to certain investment styles or asset classes, or embracing new investment strategies.”
Fidelity’s online and telephone poll was conducted in 2018 among 905 investors at pensions, insurance companies and financial institutions in 25 countries with total assets under management of more than $29 trillion. Strategic Insight executed the survey in North America and FT Remark, a Financial Times division, did so in all other regions.
Sixty-two percent of institutions in the survey said they expected that advances in technology, such as high-frequency trading algorithms and quantitative investment strategies, would make markets more efficient.
“Technology continues to fundamentally change the industry and how we think about investing,” Judy Marlinski, president of Fidelity Institutional Asset Management, said in the statement.
“We encourage institutions to collaborate with their investment partners — investors and asset managers alike can work to foster a culture of innovation in investing.”