Global asset allocators are increasingly turning to fixed income and cash investments in response to ongoing economic uncertainty and market volatility, as revealed by PGIM’s latest Gatekeeper Pulse study. The study surveyed 210 gatekeepers from major financial institutions in Europe and Asia, each managing assets of at least $1b.
The study highlights a significant interest in public fixed income, with 43% of respondents predicting higher returns and 37% planning to increase allocations. In Asia, 65% of gatekeepers intend to boost government bond investments, whilst 61% favour investment-grade credit. Private credit also sees a net 22% of allocators planning to increase exposure, driven by expectations of higher returns.
Matt Shafer, head of international intermediary distribution at PGIM, noted the appeal of fixed income in uncertain markets, stating, “Clients are turning to fixed income for both steady income and critical downside protection.”
The study also indicates a mixed outlook on risk, with 32% of gatekeepers planning to increase risk positioning, whilst 40% expect a decline. Geopolitical risks, recession fears, and inflation are primary concerns, with 83% anticipating greater return volatility.
Despite a cautious stance on equities, transformative technologies remain a bright spot, with 73% of Asian gatekeepers planning to increase AI allocations. Jessica Jones, head of Asia intermediary distribution at PGIM, emphasised AI’s potential, stating, “We expect the next significant phase of AI growth that investors can capitalise on will come from a wave of AI-driven applications.”
The findings underscore a strategic shift towards stable income solutions and innovative equity themes, reflecting the need for risk management and flexibility in today’s volatile market landscape.
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