Real asset allocations to rise, inflation drives shift

25 January 2023
| By Charbel Kadib |
image
image
expand image

Global asset manager Aviva Investors has published the findings of its Real Assets Survey 2023, which involved a survey of 500 institutional investors from across the globe.

According to the research, approximately two thirds of institutional investors planned to increase allocations to real assets over the next two years, of which, 23% expected to increase their exposure by less than 5% for forecast growth of between 5-10%.

Conversely, just 12% of respondents noted plans to reduce real asset allocations.  

At present, approximately 47% of investors managing real assets held allocations of up to 10%, with approximately one fifth exposing at least 20% of their portfolio to the asset class.

Inflation driving growth in real asset allocations

According to Aviva’s survey, a growing number of investors had increased their exposure to real assets over the past three years as a hedge against inflation, up from 33% to 53%.

This trend was reflected across all three regions listed in the research, with inflation cited by investors as the reason behind their real asset allocations in North America (63%), Europe (53%), and the Asia-Pacific (42%).

Over the same period, the proportion of institutional investors managing real assets to diversify their portfolio fell from 64% to 57%.

However, diversification remained the primary driver for investing in real assets, closely followed by inflation proofing, delivering long-term income (38.2%), capital preservation (36.8%), capital growth (31%), liquidity premium/uncorrelated returns (30%), positive ESG impact (27.6%), and cashflow matching (20.8%).

ESG impact of real assets

The Aviva study also explored sentiment toward ethical, social, and governance (ESG) investing among respondents, with more stating they would leverage real asset allocations to make a positive ESG impact — up from 17% to 28%.

ESG sentiment was strongest among investors in Europe, with just 2.4% stating ESG was not a consideration for their investment in real assets.

In contrast, 15.2% of institutional investors in North America did not consider ESG when making real asset investment decisions.  

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 3 days ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 1 day ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

2 weeks 5 days ago