Not for release or distribution in the US

Despite enjoying better-than-expected returns in 2013, institutional investors are significantly reining in their return expectations for 2014 and turning to alternative – and illiquid – asset classes alongside global equities, according to the latest AMP Capital Institutional Investor Report.

The survey of global institutional investors, who manage a collective US$2.4 trillion, found respondents' portfolios returned on average 13 per cent in 2013. However, respondents see key risks to the global economy as stumbling blocks in achieving their investment returns for the year ahead. For the remainder of 2014, respondents expect to achieve average returns of 7.3 per cent.

Globally, respondents in Asia Pacific have the highest baseline and optimistic forecast for 2014 at 8.1 per cent and 12.1 per cent, respectively. Respondents from Europe and the Middle East have consistently lower forecasts on average than those of investors in Asia Pacific and also The Americas.

AMP Capital Chief Executive International and Head of Global Clients Anthony Fasso said: “Institutional investors enjoyed a stellar year in 2013 largely due to the bull market in equities around the world. Of those we surveyed, 93 per cent either met or exceeded their expectations. Allocations to domestic and international equities served investors well, with developed market equities performing better than those in emerging markets. However, investors’ planned allocation increases for the rest of 2014 are most pronounced in alternative assets especially in private equity and direct real estate and infrastructure. This is a continuation of the trend that we have highlighted in earlier issues of our Institutional Investor Report series.

“Looking ahead, investors have uncertain expectations. Their concerns are based around the risks they see to the global economy including the ongoing crisis in Ukraine, the end of quantitative easing by central banks and questions over the future direction of China’s economy. Despite this, the majority of investors surveyed expect to make no substantive change in their approach to seeking returns either through alpha strategies or by bearing more risk.”

Key findings from the survey include:

For a full copy of the report, visit: https://www.ampcapital.com/Campaign/IIR