More than half of investment institutions seek to reduce their holdings

The BlackRock survey shows that as the economic cycle shifts, global investors are increasing their portfolios to withstand the economic downturn. More than half plan to reduce their holdings this year, and more investors plan to increase their holdings in private equity and real estate.

The survey interviewed 230 institutional investors in BlackRock, bringing the total value of investable assets in the world to more than $7 trillion (about 54.6 trillion Hong Kong dollars). The results show that 51% of the respondents intend to reduce their holdings of listed shares this year, which is an increase from 29% and 35% respectively in the past two years. Among them, more than two-thirds of the respondents in the US and Canada plan to sell shares, which is 40% in the Asia Pacific region.

65% of Asia Pacific holds substantial assets

The survey also shows that private market assets will be more popular this year. Among the respondents, 54% intend to increase their holdings of real assets, 47% to increase private equity funds, and 40% plan to buy real estate. Respondents in the Asia Pacific region alone said they would increase their holdings of real assets, private equity funds and real estate, which were 65%, 40% and 44% respectively. Institutional customers expect to re-adjust risk deployments to identify low-return sources of investment performance, allowing funds to flow further into low-liquid alternative assets.

Edwin Conway, global head of BlackRock’s institutional client business, said that as the business cycle shifts, private market assets can help customers cope with a more challenging investment environment, so it’s no surprise that customers are improving the allocation of low-liquid assets, including private placements.

The survey also found that most institutions are interested in maintaining or raising their cash holdings this year. This is most evident in institutional investors in the Asia Pacific region, with one-third of them planning to increase their holdings of cash to secure their portfolios. In addition, Conway pointed out that because many defined benefit plans focus on reducing risk levels, corporate retirement funds are more interested in investing in fixed income.