Market volatility and economic uncertainty are leading investors towards active management as a means to strengthen portfolio resilience, according to Schroders’ Global Investor Insights (GIIS) survey.

The majority of investors (55 per cent) said they plan to focus on “portfolio resilience” over the coming 18 months, and more than 80 per cent of those said they were more likely to increase their use of actively managed investment strategies in the coming year.

The vast majority (90 per cent) believed that either an active strategy or a blend of active and passive would bring the strongest returns.

The major cause for economic concern for most investors was tariffs and protectionist trade policies; almost two-thirds (63 per cent) of institutional investors and wealth managers voted this area as the “most significant” consideration for future investment decisions.

This came in far above the next highest concerns – 10 per cent said economic downturn and the same percentage said higher inflation. Climate risk was a top concern for only 1 per cent.

With markets vulnerable to geopolitical and economic risks, the role of active managers to make important, timely decisions appeared attractive.

More than half (52 per cent) said the top attribute they wanted from active management was the ability to “capture investment opportunities”, and 48 per cent said it was “building portfolio resilience.”

Schroders’ group chief investment officer, Johanna Kyrklund, said: “With four in five investors set to increase their allocation to actively managed strategies this year, it’s clear they value a selective and adaptable approach.”

She added: “The wider backdrop is that financial markets are still adjusting back to structurally higher interest rates, made painful in many cases by high levels of debt. This is raising questions about future market trends and the value of passive approaches in a period of greater uncertainty.”

“Resilience now tops the investment agenda, as the rising tide no longer lifts all boats. In this environment, active strategies provide the control investors need to manage complexity, create portfolio resilience and seize opportunities.”

This article was originally published on our sister title, Pensions Age.

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