A majority of institutional investors and wealth managers are turning their focus to yield as opposed to growth in response to the changing geo-political and macroeconomic environment, new research from Managing Partners Group (MPG) has revealed.

Eighty per cent of the institutional investors and wealth managers surveyed worldwide, with assets of €107bn under management, said their funds will increase their focus on yield over the next 12 months; 11 per cent said there will be a dramatic increase in the focus on yield.

The professional investors expect yields in the fixed-income sector and allocations to the sector to increase over the next 12 months but are less positive on the next six months, the research found.

Seventy-two per cent expect yields in the fixed-income sector in general to rise over the next 12 months with 9 per cent predicting a dramatic increase. Up to 74 per cent expect allocations to fixed-income assets to rise over the same period, with 22 per cent predicting a dramatic increase in allocations, the study found.

Furthermore, 45 per cent said the funds they manage are under-exposed to fixed income currently with just 9 per cent believing they are over-exposed and 46 per cent estimating they have the right level of exposure.

Around 29 per cent questioned believe yields in the fixed-income sector will fall in the next six months as central banks worldwide cut interest rates. Forty-five per cent expect increased yields. Seventy-four per cent have increased allocations to fixed income over the past six months as returns have improved.

Commenting, MPG CEO, Jeremy Leach: “Rate cuts by central banks worldwide are widely expected and that is likely to affect fixed income yields.

“But rising geopolitical tensions and the changing macroeconomic environment coupled with growing concerns about stock market volatility means that professional investors are still very much focused on yield as opposed to growth and the hunt for yield is likely to be the dominant theme of the year ahead.”

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