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The results of the CIO Sentiment Survey broken down into investment impact and themes
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Facing a dramatically changed market environment, only 36 per cent of respondents are confident in meeting their return targets. But more respondents had increased their return targets in the past year (35 per cent) than those who had decreased their return targets (15 per cent), with half of respondents keeping return targets the same. Facing this situation, only 11 per cent of respondents are taking more risk to achieve their return targets.
Equity risk was selected by 36 per cent of respondents as the greatest risk to their portfolios, followed by inflation risk at 20 per cent and geopolitical risk at 11 per cent. Credit risk and liquidity risk are also clearly on the radar, with 9 per cent of respondents selecting each of these options.
Liquid equities are in a holding pattern, and the vast majority of respondents believe private markets will continue to fall. More than half of respondents (55 per cent) think private market write-downs will continue into next year, while 38 per cent think private markets will hit the bottom by the end of this year and then resume an upward trend.
Whats the biggest risk to your portfolio in the year ahead?
% of respondents
CIOs Planning Net Changes* in Fixed Income Allocations
Fixed income asset classes, % of respondents, 2023
Key Reason(s) for Allocation Change
Active Core/Core+
Rising rates and de-risking by asset owners during tough market conditions is driving resurgence of high-quality active fixed income and stable value
Active High Yield
Attractive yields and steady/low default rates are driving interest in actively managed high yield, especially bank loans due to their floating rate nature
Active Unconstrained
With higher or similar yields now available on higher quality fixed income than for unconstrained strategies, owners are reducing allocations to unconstrained
Active EM Debt
CIOs are adding tactically to EM debt to take advantage of high yields, stressing active management as country fundamentals vary widely
Passive Fixed Income
Passive fixed income provides a low fee source of core exposure and helps maintaining liquidity profiles, as well as make tactical duration bets
*Net change equals % of plans that are increasing allocations less % of those that are decreasing allocations
Only 7 per cent think private market valuations have already bottomed, and only 22 per cent are planning a net increase in total private market allocation, which is the lowest growth figure in three years.
Rising rates and de-risking by asset owners during tough market conditions are driving a resurgence of high-quality active fixed income and stable value. CIOs are also adopting more real assets and private credit to hedge against inflation risk.
Private equity optimism appears to be waning
CIOs Planning Net Increase* in Private Equity Allocation % of respondents, 2019 2023
2024 CIO SENTIMENT SURVEY