MORE THAN half (57 per cent) of professional investors expect their risk appetite to rise over the next year, a new survey has found.
According to research by NN Investment Partners (NN IP), just 19 per cent of professional investors expect their risk appetite to decrease in the coming year. Among the 57 per cent who expect their risk appetite to increase, 14 per cent said that they expect the increase to be “significant”.
One year ago just 32 per cent of the investors surveyed by NN IP expected their risk appetite to grow, while 48 per cent expected it to decrease.
The survey found that equities are still the most popular form of investment for risk-aware investors, with 51 per cent expecting to increase their allocation to equities within the next year.
38 per cent plan to increase their allocations to fixed income investments; and another 38 per cent said that they would invest more in real estate over the next 12 months. 30 per cent plan to increase their exposure to hedge funds; 27 per cent will increase their investments in commodities; and another 27 per cent will increase their private equity exposure.
“It is understandable that investor sentiment around global economic growth is divided as the outlook is also quite binary,” said Ewout van Schaick, head of multi-asset at NN IP.
“The slowdown in global growth in 2019, is mainly the result of heightened political risk which dampens business confidence and capex. So far central banks have been able to limit this slower growth’s impact on markets, but the effectiveness of monetary policy is diminishing, and further easing could even harm the economy.
“A better policy balance with more fiscal easing on top of loose monetary policy will be needed, but will there be sufficient political support for this?”