Global institutional decision makers reveal their equity strategies

How are global institutional investors managing the dramatic shifts in the macroeconomic and geopolitical environment amidst heightened uncertainty for equity markets?

A new report has asked the opinions of 300 CIOs, portfolio managers and investment directors across the world from North America, Europe, and Asia Pacific.

It found that respondents are, on average, expecting equities to deliver a 5.9% return in 2023, reflecting an anticipated rebound for the asset class this year after 2022’s double-digit losses.

Equities-based financing specialist EquitiesFirst conducted the research and also found most bullish sentiment for technology and healthcare sectors.

They are also confident in growth-oriented stocks over the medium-term despite the challenges presented by rising interest rates and persistent inflation.

While interest rates and inflation are cited among 63% of global respondents as the key macroeconomic drivers of equity performance over the next 18 months, those in North America are most concerned about these (84% rates, 79% inflation).

Other matters of global concern include trade policy (47%), business spending (33%), and energy costs (25%).

Climate change (70%), the war in Europe (65%), and rogue cyber-attacks (52%) are highlighted as the most important geopolitical drivers of equity performance.

Bearish on rate-risk industries

Those industries that are more susceptible to interest rate rises, particular real estate and finance sparked bearish sentiment among respondents.

The survey, produced in collaboration with Institutional Investor, also revealed that 67% of global survey respondents see smart beta strategies using quantitative factors to fine-tune broad index strategies, as a preferred investment strategy, especially in the most liquid and developed equity markets.

And ESG factors are increasingly providing a valuable information advantage to investors seeking to outperform the market.