Seventy-two per cent of institutional investors and wealth managers have increased their allocations to fixed-income assets over the past year due to significant interest rate rises, according to research from Managing Partners Group (MPG).

MPG commissioned Pureprofile to interview 100 investment professionals working for pension funds, insurance asset managers, family offices and other institutional investors, with a total of €245bn AUM across the UK, US, Germany, Switzerland, UAE, Singapore and Hong Kong during July 2023.

Ninety per cent of respondents expect the yields on fixed income instruments to continue to rise over the next six months – 21 per cent of these believe there will be dramatic increases while 69 per cent think rises will be slight. Nine per cent of investors and wealth managers expect rates to stay the same, while one per cent predict a slight decrease.

Looking to the next 12 months, 26 per cent of investors and wealth managers expect yields to rise dramatically, while 60 per cent think increases will be slight. Thirteen per cent predict yields to remain the same while one per cent forecast slight deceases.

To capitalise on the extra returns available from fixed income, 24 per cent of institutional investors and wealth managers said they will increase allocations to the asset class dramatically, 62 per cent said they will make slight increases. Thirteen per cent plan to keep allocations the same and just one per cent plan to slightly decrease their investment in fixed income.

Commenting, MPG CEO, Jeremy Leach, said: “Interest rates have reached their highest levels for 15 years presenting investors with a clear opportunity to make a real, positive difference to their portfolios by investing in fixed income funds. Now that central banks have reigned in their forecasts on further interest rate rises, it makes sense for investors to increase their allocations to the asset class.”

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