Post-pandemic change is afoot among asset managers, study says
15th February 2022 – The global pandemic continues to significantly impact investment strategies among global asset managers, according to new research from Clearwater Analytics (CWAN).
A poll of over 140 asset managers and owners representing more than $5 trillion in AUM showed more than a third of investors investment strategies will change this year in response to COVID. The study asked how investment strategies had changed since the start of the pandemic, and how this compares to what they have planned for 2022 in the wake of the recent omicron surge.
At a macro level, 58% of companies reported making changes to their strategy two years ago, albeit only 13% said the change was material. Looking forward from today, 33% plan further changes to their strategies and 5% said they will be material changes.
“Although these numbers are much lower than 2020, it’s still a meaningful shift. Given the many unknowns and unprecedented market volatility early in the pandemic relative to what investors are dealing with today, changes to investment strategies were inevitable,” according Suraj Poozhiyil, Senior Vice President at Clearwater Analytics.
The research also showed that 45% increased portfolio liquidity, while only 7% decreased. Most investors held steady on fixed income duration, but a meaningful 27% decreased and 16% actually increased duration. The percentages were similar for credit quality, with 25% increasing and 7% decreasing quality. Conservatism was evident on exposure to COVID hit sectors like retail, with 31% moving away, however 6% saw a buying opportunity. Equity allocations went up for 28%, almost double the number decreasing allocations – with investors taking advantage of what became historic buying opportunities.
Poozhiyil went onto say: “Investors’ early reaction to the pandemic was biased toward conservatism, with liquidity increases, fixed income duration decreases, and credit quality increases, but tempered with meaningful increases to equities and private assets.”
A small percentage, 14%, plan to increase portfolio liquidity. An equal number of companies planned to either increase or decrease fixed income duration at 12% each. However, a similar number of companies plan to improve credit quality, with only 5% planning to decrease it – an approach more consistent with rate increases. Despite the historic run-up in equity markets, 15% of companies plan to increase their allocation in 2022, with only 8% taking money on the table.
“Current plans show companies largely holding the course but continuing the trend of focusing on private assets while finetuning the profile of their fixed income portfolio. Their responses suggest investors have learned to live with COVID as our society tries to do the same,” Poozhiyil concluded.
About Clearwater Analytics
Clearwater Analytics is a global industry-leading SaaS solution for automated investment data aggregation, reconciliation, accounting, compliance, risk, performance, and reporting. Each day, the Clearwater solution reports on more than $5.6 trillion in assets for clients that include leading insurers, asset managers, corporations, pension plans, governments, and nonprofit organizations – helping them make the most of their investment portfolio data with a world-class product and client-centric servicing. Investment professionals around the globe trust Clearwater to deliver timely, validated investment data and analytics. Additional information about Clearwater can be found atclearwateranalytics.com, LinkedIn, and Twitter.
