Institutional Asset Manager Newsletter 29.11.24

Macro trends matter as asset owners’ performance returns to growth

As we approach the end of the 2024 we bring you positive news from last year with a report that the top 100 asset owners globally returned to growth in 2023 after a fall of 8.7 per cent in 2022.
Research by the Thinking Ahead Institute finds that the top institutional investors now hold a record USD26.3 trillion which marks a 12.3 per cent year-on-year increase from a miserable 2022.
The growth comes amid desperate intervention from central banks to bring spiralling inflation under control, with investors rethinking allocations to fixed income as interest rates rose.
As Jessica Gao, director at the Thinking Ahead Institute, says "macro trends matter" and they continue to make a significant impact on investor portfolios in a year when half the world went to the ballot box.
Gao says: "The rise of political influence amid the increase in geopolitical risks, major elections, and use of monetary policy to tackle inflation has necessitated asset owners to take a more sophisticated approach in managing the intersections between financial return and regulatory compliance."
The new UK government continues to make clear its intention to drive UK investors towards domestic assets, particularly to private markets. Meanwhile the election of Donald Trump as President of the US has implications for investment strategies as the threat of import tariffs looms alongside a likely reversal of climate finance policies.
Gao warns that investors will need to become ever more sophisticated in their efforts to measure and mitigate risk, noting that traditional models may be left short in today’s world.
She says: "A new approach will be required to understand and manage risks that arise from complex, systemic sources with limited historical precedent."
Elsewhere we bring you news that the much-vaunted long-term asset funds (LTAFs) are finally making an impact on the investment industry.
The funds, which are designed to make it easier to invest in illiquid assets, have taken their time to come to market, but in the last few months alone several asset managers have launched new offerings.
The latest is Aviva with a private debt LTAF – its third such offering - which Jill Barber, Chief Distribution Officer at the company, says "continues [Aviva’s] ambition to be the go-to LTAF provider for the UK’s defined contribution and wealth markets".
However, the firm faces stiff competition from Schroders which launched its fifth LTAF in September, while Fulcrum is hot on the two asset managers’ heels with its LTAF range.
Whether these funds live up to the hype, they are certainly a welcome addition for smaller investors to access what has historically been a market with high barriers to entry.
We continue to watch with interest.

Gill Wadsworth, Editor, Institutional Asset Manager
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