The survey, which gathered insights from over 300 senior investors managing more than US$7 trillion in assets across 39 countries, highlighted a growing focus on risk management, resilience and private market opportunities.
Risk management has become a top priority for investors, with 75 per cent emphasising the need to build portfolio resilience.
Geopolitical unrest remains the chief concern, with more than half (54 per cent) of investors citing it as a major risk, followed by prolonged downturns in risk assets (23 per cent) and liquidity risks (19 per cent).
Investors are employing various strategies to navigate these challenges, with 22 per cent already using equity overlays, and another 9 per cent planning to implement them to buffer against potential equity market corrections.
Kathryn Saklatvala, head of investment content at bfinance, commented on the findings: “The report reveals that in an increasingly uncertain world, resilience has taken centre stage for institutional investors.
“The focus on managing risks like geopolitical unrest, liquidity challenges and prolonged market downturns underscores the critical need for robust strategies.”
Private markets and fixed income dominate allocations
Private markets remain central to investment strategies, with 53 per cent of investors planning to increase exposure over the next 18 months.
Infrastructure (36 per cent) and private debt (35 per cent) are leading areas of interest, as investors seek stable, long-term returns amid market volatility.
Notably, interest in secondaries is growing, with 37 per cent of investors boosting exposure, while satisfaction with private equity managers has dropped significantly from 94 per cent in 2022 to 69 per cent in 2024, suggesting increased scrutiny of general partners.
Equity portfolio diversification is another key priority
Only 34 per cent of investors expect the largest tech stocks to outperform broader indices in the coming year, with 34 per cent planning to diversify their equity portfolios over the next one to two years.
Fixed income strategies, particularly investment-grade bonds, are also gaining traction, with 22 per cent of investors boosting allocations. However, satisfaction with real estate managers has sharply declined, with only 35 per cent satisfied in 2024 compared to higher ratings in 2022.
Impact investing and emerging technologies
Impact investing is steadily growing, according to the survey, with 27 per cent of investors already engaged and another 26 per cent planning to enter the space.
Climate transition remains a major theme, with 40 per cent of respondents identifying it as a strong investment opportunity.
Biodiversity-focused assets are expected to experience a significant surge, with a projected 200 per cent growth as investors increasingly focus on nature-based solutions.
Artificial intelligence (AI) is also emerging as a key investment theme, with 40 per cent of investors viewing it as a strong opportunity. However, there is a cautious shift away from large tech stocks, reflecting concerns over tech-related concentration risks and a broader interest in diversified equity strategies and AI-focused investments.
However, despite growing interest in digital assets and cryptocurrencies, adoption remains limited.
Namely, only 9 per cent of investors have exposure to digital assets, a slight increase from 8 per cent in 2022. While 21 per cent of investors expected to have exposure to digital assets within five years in 2022, this remains a niche area, with broader interest still lagging behind other emerging themes.
Overall, the survey’s findings suggest that while investors remain wary of certain risks, they are actively recalibrating their portfolios to navigate a rapidly changing investment landscape.
“From equity overlays to private markets and fixed income, we’re seeing investors actively recalibrate portfolios to navigate these challenges, balancing caution with the pursuit of opportunity in areas such as impact investing, infrastructure and emerging technologies like AI,” Saklatvala said.
