Asset management professionals, by contrast, were far more concerned about central bank policy as a risk to the global economy than pension fund decision makers. The second most commonly cited risk was central bank policy (25%), ahead of inflation (11%) and growth (5%).
Steve Cook, Co-Head of Emerging Markets Fixed Income at PineBridge Investments said: The results surprised me, as I believe geopolitical risk is currently quite low by recent standards. Presumably, respondents are nervous with regard to Korea, Iran, and other potential flashpoints
It is likewise interesting that pension fund professionals are far more sanguine about the risk posed by central bank policy to the global economy than asset managers. In my opinion, the biggest risk to the global economy is ‘central bank policy’ given that the huge stimulus measures that followed the financial crisis are gradually being wound down.
The survey also revealed that pension professionals and investment consultants view the belief in a manager’s investment strategy / philosophy as more important (55%) than investment performance (32%). A much smaller set of respondents named the most important factor as brand name (4%) and commitment to diversity and/or sustainability (8).
Hani Redha, Portfolio Manager, Global Multi-Asset at PineBridge Investments said: The vast majority of pension professionals said their primary reason for choosing an asset manager is a belief in the manager’s investment strategy /philosophy. It’s a positive stance because ultimately they are backing and buying the manager’s approach. Performance, by contrast, can be skewed and needs to be scrutinised over the long term to yield meaningful signals. Short-term performance can tell you very little.
Interestingly the survey also found a wide dispersion in the take up of passively managed assets, with a 40-60 passive to 40-60% active ratio the most common balance (25%), ahead of 20-40% passive / 60-80% active (17%).
This reflected further findings that responders found fee pressure to be their biggest challenge (34%), ahead of achieving returns / downside protection (29%) and regulation 25%.
To view the full survey, please click here.
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