Strong equity and bond returns over 2023, together with better clarity on the direction of inflation, led to greater confidence among asset owners that they will meet their return targets. The 2024 survey found 57 per cent of respondents confident they would meet their targets, compared with just 36 per cent at the beginning of 2023. 

This confidence brought a greater appetite for risk, with 20 per cent of respondents taking more risk to achieve their return targets – higher than 2023 when the figure was 11 per cent.

While there was not a clear trend away from public equities, there was rising concern about equity risk with 43 per cent of respondents citing equity risk as their top concern. Those most concerned about equity risk were drawing down from active allocations.

Worries about inflation have eased with only 9 per cent citing inflation as a key risk factor. But it remains a concern, with 48 per cent of CIOs adjusting the duration of fixed income allocation in response to inflation, and 45 per cent investing in private markets sectors with more inflation-proof characteristics.

But geopolitical risk is causing greater anxiety, with 23 per cent of respondents citing it as a key risk factor–much more than 2022 at 5 per cent and 2023 at 11 per cent. This is driving changes in fixed income portfolios towards active core/core+ and active high yield, and away from active EM debt.