Eighty-eight per cent of global institutional investors and wealth managers predict there will be an increase in pension funds locking in gains from strong equity performance to rebalance portfolios to fixed income as they are anticipating high levels of volatility in equity markets.

The research, which was conducted by Pureprofile on behalf of Managing Partners Group (MPG) in August 2024, included 100 investment professionals from pension funds, insurance asset managers and other institutional investors with a total of €136bn assets under management in the UK, US, Germany, Switzerland, UAE, Singapore and Hong Kong.

MPG’s survey found that 91 per cent predict equity markets will experience high levels of volatility over the next 18 months and of these, 96 per cent think this volatility will lead to investors increasing their allocation to fixed income. Less than one in 10 (8 per cent) predict the levels of volatility in equity markets will stay the same as it is today.

The sentiment is so strong that 95 per cent of institutional investors surveyed agree that we’re entering ‘the decade for fixed income’, in the same way as the last decade was for equities.

With the current and expected market volatility, 95 per cent of those surveyed expect active bond strategies – such as fixed-income bonds – to outperform passive ones in the next five years. Ninety-eight per cent of those surveyed also agree with the view that high-yield credit will outperform US stocks over the next five years.

MPG CEO, Jeremy Leach, commented: “With the current and expected market volatility our new research shows a resounding agreement among professional investors to lock in the gains they’ve made from equities and rebalance portfolios to fixed income.

“Their view is so strong that many professional investors believe that the traditional 60 per cent equities 40 per cent fixed incomes allocation should be dramatically revised to include a much higher proportion in bonds.”

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