Economic Views

What do pension funds want from an investment?

The Global Investor Study provides insight into how pension fund executives construct their investment views

03/02/2017

Gavin Ralston

Gavin Ralston

Head of Official Institutions and Thought Leadership

Aim, context and key findings

The Schroders Global Investor Study seeks to provide insight into how pension fund executives construct their investment views, the issues they rate as priorities and the extent to which environmental, social and governance (ESG) considerations are a factor in their decision-making.

The background to this study is one of significant political turmoil. The rise of populism at a time of already heightened central bank intervention has created an investment environment that demands clear-headed navigation. Investors of all stripes are under pressure to find returns in a climate of lower growth and higher uncertainty.

At the same time, financial markets appear, potentially, to be at a turning point – moving from a widespread expectation of deflation to an environment where inflationary pressures are starting to re-emerge. The need to generate returns in excess of inflation is clearly an increasing weight on the minds of pension fund investors.

Also apparent is the clear focus on generating a long-term real return, with much less concern than retail investors for income or liquidity
In this respect, the era of the relative return would appear to be waning, with investment outcomes now much more of a priority for many investors – and multi-asset and so-called ‘smart beta’ approaches gaining momentum as preferred ways to go about achieving them. These are not just uncertain times for investors but for the investment management sector also.

This independent study of 712 institutional investors was commissioned by Schroders. Respondents came from the UK, France, Germany, Netherlands, Belgium, Switzerland, China, Japan, Hong Kong, Singapore, Australia, USA, Canada, Brazil and Chile.

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The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.