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In Asia-Pacific, low-yields and regulations drive new asset allocations
In a low-yield environment, many Asia-Pacific investors are more actively monitoring their portfolios and willing to increase turnover and shift asset allocations in search of higher returns. However, they proceed cautiously with shorter time horizons due to fears of increased market volatility. Equities, new products, and diversifying across markets are seen as potential sources of returns and ways to mitigate risks. The survey also found that regulations are driving some investors to reallocate assets and take a more active approach to portfolio management, despite increased risk.
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In Asia-Pacific, low-yields and regulations drive new asset allocations
- 1. Sponsored by:Sources: TheEconomist Intelligence Unit survey, July 2017 Copyright: © The Economist Intelligence Unit, 2017 Investment and regulatory climate causing asset reallocation InAsia-Pacific, low-yields andregulationsdrivenewassetallocations In today's low-yield and regulated environment, many Asia-Pacific investors are more actively monitoring their portfolios with a willingness to increase turnover and shift asset class allocations for higher returns. However, they tread cautiously and with shortening time horizons on fears that market volatility will increase. Equities, new products, and diversification across markets are seen as sources of future alpha and factors to help mitigate risks. % respondents Investors looking to other asset classes % respondents Investors shifting portfolio strategies Cash Funds Alternatives Commodities Bonds and Fixed income Equities 9% 19% 34% 39% 41% 50%taking a more active approach to investing reallocated asset classes due to regulations increasing portfolio turnover despite increased riskiness 45 CHANGES ON THE INSTITUTIONAL INVESTMENT HORIZON
- 2. CHANGES ON THE INVESTMENTHORIZON Sponsored by:Sources: The Economist Intelligence Unit survey, July 2017 Copyright: © The Economist Intelligence Unit, 2017 Investment time horizons under pressure New products and markets hold alpha promise New products New markets Regulations arbitrage opportunities New technology and tools Increased focus on factors Where Asia-Pacific investors see alpha in the next 3-5 years 80% expect to increase their Environmental, Social and Governance (ESG) investments over the next five years % respondents, top five responses plan to increase exposure to developing markets in Asia. 56% 48% 38% 36% 34% 23% % respondents, top five responses What is the biggest impediment to lengthening the investment horizon? Financial stability risk is the number one concern of institutional investors in Asia-Pacific Market volatility Reputational risk Short-term requirements Global economic outlook Regulatory change 35% 29% 27% 27% 23% of Asia-Pacific investors are shortening their holding periods