The coming year will see a significant fixed-income restructuring, a jump in real assets investing and increased competition between managers, according to recent survey by Casey Quirk and eVestment.
The two polled more than 65 global investment consultants (representing $3.7 trillion in assets under advisement) and more than 135 institutional investors (overseeing $1.6 trillion in assets) between November 7, 2013 and January 27, 2014.
The institutional investors polled included corporate and public pensions, non-profits, defined contribution plans, outsourced CIOs, multiemployer funds and retail intermediaries. More than 40% of the survey respondents were located outside of the U.S.
The survey found that rising interest rates continue to trouble all respondents, with an average of 53% citing them as a major concern.
A full 48% of participants expect to restructure their fixed-income portfolios, particularly corporate pensions adopting LDI and rate-concerned investors de-linking their portfolios from interest rate-sensitive strategies.
Real assets represent 14% of forecasted new search activity for consultants in 2014, versus 6% in 2013.
The survey also suggests 2014 will see increased competition amongst managers “in particular for traditional mandates, as net flows subside and replacement search activity becomes the norm.”
Domestic equity, EAFE equity, and domestic fixed income will see the collective proportion of expected search activity from manager replacement increase to 58%, from 45% in 2013.
“This survey offers a comprehensive global snapshot of the concerns and plans of the institutional investment community this year and looking forward,” said eVestment founder and CEO Jim Minnick, in a statement. “As the investment community becomes more global, more complex and we emerge from a period of low interest rates and global economic concern, this kind of information is crucial for asset managers seeking to better map strategies.”