Institutional investors focus on good investment record

Low fees and a high degree of liquidity in multi-asset strategies are less important to institutional investors than a good investment record, according to research commissioned by NN Investment Partners.

The research, conducted amongst NN Investment Partners’ panel of institutional investment managers, showed that low fees were listed by 46% as important and liquidity by 40%. However, 63% cited a good track record in delivering risk-adjusted returns.

Three in four (75%) of institutional investors said a solid investment process was important in a multi-asset strategy, followed by a good historical risk-adjusted performance (57%); investment team stability (56%), full flexibility to divest from any asset class (45%), limited exposure to downside risks (44%).

Valentijn van Nieuwenhuijzen, head of Strategy, Multi-Asset, at NN Investment Partners, commented: “Fees and liquidity are clearly important to institutional investors but our research shows that realised returns in the longer term is more important to them.”

“They have a number of considerations when investing in multi-asset strategies but ultimately they are looking for asset managers who can navigate ever more complex financial markets and make the right calls to deliver steady, incremental returns over the long term, which is a pragmatic approach.”

The research also showed that 65% of respondents expect institutional investors generally will increase their exposure to multi-asset strategies over the next three years, with one in seven expecting the increase to be ‘dramatic’.

Investors’ strong preference for multi-asset funds is underpinned by 75% of respondents who view global multi-asset strategies as a good investment that adds value. 14% of respondents ‘strongly agree’ with this viewpoint and only 4% disagree.

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