Institutional investors across the Asia Pacific region were the most confident about meeting their short and long-term investment objectives against the COVID-19-induced market volatility, according to research from State Street Corporation.
The research found that 38% of institutional investors in Asia believed they would meet short-term objectives, compared with only 24% globally, and 85% were confident about realising their long-term objectives versus 56% globally.
More interestingly, the study revealed that half of institutions globally were looking to increase allocation to equities in the next three to six months while Asian institutional investors were more likely to add exposure to private credit (40%), followed by equities (33%), and active investments (25%).
At the same time, the majority of institutions did not expect a rapid ‘V-shaped’ recovery from the crisis, with two-thirds (66%) not expecting economic activity to return to normal before 2021 or even later.
Investors from the Asia Pacific region also had the greatest trust in their managers, with 88% saying they were confident about their managers’ ability to navigate the crisis compared to only 76% of global investors.
“The findings suggest that asset managers in Asia Pacific appear to have kept institutional investors onside during the pandemic, reinforcing the finding that they have been less impacted than their global counterparts,” Ian Martin, global head of asset owner segment at State Street, said.
He added that institutional investors in the region were also impressed by their managers’ support, with majority (88%) rating their managers’ communication, support and information as either ‘good’ or ‘very good’.
“The market volatility sparked by COVID-19 has clearly impacted the investment performance of institutional investors globally.
“However, it appears that Asian investors are more confident about meeting their investment objectives largely because some countries in the region have contained the impact of the virus and the pandemic is at a later stage compared with other parts of the world.”
The research was conducted by CoreData in April and examined at 250 investment professionals at pension funds, insurance firms, sovereign wealth funds and endowments.