In Focus

Shaky stock market pushes Singapore institutional investors to private equity

Over 7 in 10 say they will boost funds in this area.

Majority of Singapore institutional investors are showing a burgeoning interest in private equity, with over 7 in 10 (73%) surveyed saying they plan to boost their allocations to this area, revealed Natixis Global Asset Management’s survey of global survey of institutional investors

The survey also showed that institutional investors in Asia see alternative strategies as a source of diversification and alpha, which is the excess returns of a fund relative to the return of a benchmark index.

“In a volatile market, alternatives are effective diversifiers for investors who are looking to build a more resilient portfolio that can better enhance return and reduce risk,” stated Fabrice Chermouny Natixis’ executive vice president and global head of institutional sales.

Further, over 7 in 10 (77%) of local institutional investors surveyed said that stocks and bonds are too highly correlated.

“In the current market, traditional asset allocation has become a zero-sum game. An investment approach that’s fit for modern markets is needed. Institutional investors are increasingly moving to a broader mix of non-correlated assets alongside traditional stocks and bonds,” said John Hailer, chief executive officer of Natixis Global Asset Management in the Americas and Asia and Head of Global Distribution.

The survey also revealed that market volatility is cited as the biggest risk to investment performance in 2016 by over 8 in 10 (86%) Singapore investors. Most investors also said that low-yield environment is the top concern. Lastly, more than 25% of Singapore investors surveyed believe there is alpha in environmental, social, and governance investments.

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