More than three quarters of U.S. institutional investors are expecting interest rates and inflation to remain elevated for at least the next 12 months, putting fixed income investments in pole position to generate the best returns in 2024.
A new report from CoreData also reveals that these organizations are tiring of active equity strategies that are underperforming with four in ten offboarding those that do not hit the mark. A similar share is raising their hurdle rates for risk assets.
The current rate and inflation environment is influencing low-risk strategies with attractive risk-free yields available. Respondents have raised strategic allocations to government bonds/cash-like investments (43%), slowing new investments into risk assets (43%), and trimming their exposure (30%).
Not that active strategies are off the table. In fact, 54% of poll participants expect their actively managed equity strategies to deliver strong outperformance in the next year, while expectation for equities overall is muted with 35% bullish on U.S. equities in the next three months compared to 45% bearish. Just 10% are bullish on Chinese equities over the same period vs. 78% bearish.
Investors rank the economic outlook, rate expectations, and valuations as their top three drivers of their outlook for equities over the next three months.
Seven in ten respondents say tech stocks are overvalued and a catastrophic market event is also a rising concern with 47% saying a tail risk event is more likely than average. Eight in ten say quality will drive performance in the next three months.
“These results show that 5% risk-free yields have completely changed the calculus for institutional
investors,” said Michael Morley, US Research Director at CoreData. “The trend of de-risking portfolios
and consolidating active investments with high conviction managers is likely to accelerate, putting a
painful squeeze on the industry which is already faced with a low beta environment.”
Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL
According to a federal charges Bradley Heppner, 60, received more than $150 million in payments through funneling money from GWG Holdings to a shell company.
A $1B fund allegedly skimmed 30% off the top, then swapped cash for locked-up stock.
Insiders allegedly rewrote projections three times in four days.
TCI Wealth Advisors also has also tapped JIFFYAI to unify onboarding and servicing, while TradePMR adds ICE market data to its Fusion advisor platform
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
