According to latest version of the firm’s Risk Rotation index, 57% of the panel of 107 international institutional investors surveyed in April preferred multi-asset strategies over equities and hedge funds in terms of risk versus return.
While 64% of respondents said the had maintained their overall risk position and 59% said their have maintained their exposure to risky assets, 44% of investors surveyed also said they have increased portfolio diversification over the past 12 months in an effort to replicate the effects of multi-asset strategies.
And, the group said: “Notably, more than a quarter (27%) of investors said that they had reduced the cash allocation in their portfolio, indicating a preference for more risk-friendly investment strategies.”
This makes sense given that overall risk appetite increased 13.1% during the prior quarter, with 29.6% of investors saying their risk appetite had increased over the previous six months, NN Investment Partners said.
“Equities are viewed as the most attractive asset class in the coming three months, being selected as the top choice amongst 61% of respondents. It was followed by Real Estate (15%) and Fixed Income spread products (8%),” the firm said.
Valentijn Van Nieuwenhuijzen head of strategy, multi-asset at NN Investment Partners said: “Given the dramatic fall in interest rates and strong capital market returns it is not surprising to see investors reducing their high levels of cash holdings. The opportunity costs of holding on to cash have been high in recent years and the need for higher returns remains high in many parts of the investor habitat.
He added: “It would appear that investors are slowly adjusting their portfolios from ‘risk off’ mode to ‘risk on’ and it will be interesting to see if this trend continues to gather momentum as we head towards Q3 2015.”
