Institutional investors less certain

Institutional investors are significantly reining in their investment return expectations for 2014, according to new analysis released by AMP Capital. 

The AMP Capital Institutional Investor Report, released this week, has noted that despite enjoying better-than-expected returns in 2013, institutional investors are significantly reining in their return expectations for this year and “turning to alternative - and illiquid - asset classes alongside global equities”. 

The report is based on a survey of global institutional investors, who manage a collective US$2.4 trillion and found respondents’ portfolios returned on average 13 per cent in 2013. 

“However, respondents see key risks to the global economy as stumbling blocks in achieving their investment returns for the year ahead,” it said. “For the remainder of 2014, respondents expect to achieve average returns of 7.3 per cent.” 

It said that, globally, respondents in Asia Pacific had the highest baseline and optimistic forecast for 2014 at 8.1 per cent and 12.1 per cent, respectively, while respondents from Europe and the Middle East had consistently lower forecasts on average than those of investors in Asia Pacific and also The Americas. 

Commenting on the findings, AMP Capital chief executive International and Head of Global Clients Anthony Fasso said: “Institutional investors enjoyed a stellar year in 2013 largely due to the bull market in equities around the world. Of those we surveyed, 93 per cent either met or exceeded their expectations”. 

However, he noted that investors’ planned allocation increases for the rest of 2014 were most pronounced in alternative assets especially in private equity and direct real estate and infrastructure.