What keeps institutional investors up at night?

Survey shows money managers still spooked by events in Europe

Sep 26, 2012 @ 1:41 pm

By Jason Kephart

The bad news coming out of Europe has slowed to a trickle over the past couple months, but institutional investors don't expect the good times to last.

Seven out of 10 institutional investors cited fallout from Europe's sovereign-debt crisis as the most likely source of market volatility over the next two years, according to a survey released on Tuesday by Natixis Global Asset Management SA. What's more, 43% said the uncertainty on the Continent is the top issue keeping them up at night.

As if on cue, Spanish 10-year bond yields shot up over 6% for the first time in a week and the euro fell to a two-week low against the dollar Wednesday morning.

To fight against the expected increase in market volatility, which 82% reported having trouble dealing with, institutional investors increasingly are turning away from the traditional 60/40 stock and bond portfolio and adding less correlated alternative assets, according to the survey. More than three quarters of respondents said they consider alternatives essential to diversifying portfolio risk.

“They're looking for smoother return streams and recognize that alternatives need to be in the tool bag to manage risk,” said Bob Hussey, executive vice president of institutional investing at Natixis.

The smoother return streams do come at a price, though. Nearly two-thirds of institutional investors surveyed agree that lowering the overall risk of a portfolio means accepting lower returns. Coincidentally, more than 80% of institutional investors reported having difficulty meeting total-return objectives.


What do you think?

View comments

Recommended for you

Featured video


Why advisers are pessimistic about the economy

Deputy editor Bob Hordt and senior research analyst Matt Sirinides discuss a recent InvestmentNews survey of advisers, most of whom see a recession ahead before the next presidential election.

Recommended Video

Keys to a successful deal

Latest news & opinion

Blackrock exposed data on 12,000 financial advisers

The data appeared in three spreadsheets, linked on one of the New York-based company's web pages dedicated to its iShares exchange-traded funds

Advisers throw cold water on FIRE movement

Millennials love it, advisers don't: Turns out, extreme early retirement is a suitable goal for almost nobody.

10 universities with the most billionaire alumni

These 10 American schools have the greatest number of alumni who are billionaires.

Top-performing ETFs of 2018

The markets took a beating last year, but these exchange-traded funds bucked the trend

Widow awarded $4.2 million by Finra panel for theft by ex-Royal Alliance broker

The former broker, Gary Basralian, earlier pleaded guilty to theft and is facing up to 20 years in prison.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print