Trends
As nonprofit investors expect market volatility to continue, with the possibility of an economic recession on the horizon, many are seeking early-stage private equity, private debt, real estate, infrastructure or hedge fund strategies to capitalize on macro trends that include a slowdown in economic growth, rising inflation, emerging technologies and demographic trends.
Following a year where the majority of asset class returns were in the red with the exception of commodities and cash, the market outlook for nonprofit investors remains murky as institutions expect continued market volatility and slower economic growth.
Main problems commonly cited by institutions were underperformance and outcomes that differ from the intended result, according to the report.
Institutions have begun to reevaluate their investment in the world’s second largest economy as they weigh a multitude of factors related to either increasing or reducing their exposure, including geopolitics, diversification and market uncertainties.
Institutional investors indicated that rising rates and a recession will increase the importance of fixed-income within portfolios after years of low yields.
Institutional investor incorporation of ESG into investment decision-making processes was down year-over-year, however, foundations and endowments integrated ESG at the highest rate, according to a recent survey.
The managers are looking to drive continued inflows and be better positioned for the future through their performance, product development and regulatory compliance.
A major public pension in Canada aims to achieve a net-zero portfolio by 2050.
New rule allows plan fiduciaries to consider climate change and other environmental, social and governance factors.
The relative strength of the U.S. dollar in recent months has industry experts feeling it is an opportune time for some institutions to expose their portfolios to currency hedging.