Consulting firm Mercer in a survey of more than 350 asset managers and asset owners from around the world found that allocations are increasing to private markets.
The live poll, conducted at Mercer’s Global Investment Forum US last month, showed 66% of respondents would seek to add exposure to private markets when presented with a model 60/40 portfolio in the current market conditions.
The poll also showed a renewed focus on hedge funds and ESG policy design, with implementation and governance as key afocal points.
Mercer President for Investments and Retirement Rich Nuzum said diversification will play a critical role in response to headwinds driven by the Russia-Ukraine conflict and China’s zero-COVID policy, as well as globally tight labor markets and other supply/demand imbalances stemming from the reopening from the global pandemic.
“After one of the best 10-year periods for a 60/40 publicly traded stock-bond portfolio, we’ve had the worst first six months of the year for equity markets since 1970,” Nuzum said in a statement. “Asset owners are revisiting their strategic asset allocations to consider the resilience of their portfolios against increasing inflationary pressures, volatility, and potential disruptions to economic growth.”
Mercer views skilled active management becoming more important over the coming years as a means of improving diversification as well as manager selection, according to Nuzum. The trends will require strong governance and proficiency in evaluating and accessing highly rated managers and strategies, he added.