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January 3, 2024

Investment Week: Institutional fixed income investors set to take on greater risk in 2024

84% of those surveyed

Most institutional fixed income investors are set to increase the levels of risk in their investments over the next year, a survey has found.

Research from Aeon Investments revealed that 84% of those surveyed plan to increase levels of risk in 2024, with one in ten making a dramatic increase, compared to just 1% who will decrease levels of risk.

Over the next three years, 38% of investors said they planned to make dramatic increases to their level of risk, while 44% will make slight increases.

The survey also found that 88% of respondents said their portfolio will have a greater global allocation to fixed income over the next three years, with 35% increasing this dramatically.

Over a third (26%) of respondents said their credit/fixed income allocation was weighted well in terms of their local country market, while 8% said they were very overweight, and half reported being slightly overweight. By contrast, 5% reported being very underweight.

However, only a fifth of respondents reported their credit and fixed income investments were “very well-aligned” with their funds’ liquidity budgets.

While half said they were “quite well-aligned”, 24% stated their credit investments were “much more illiquid” and 6% said they were “slightly more illiquid” than their funds’ budgets.

Khalid Khan, head of portfolio management at Aeon Investments, said: “Increasing global fixed income allocations maximises diversification across all markets and issuers, and can have a positive influence on the portfolio’s risk return profile. The same is true of incorporating a broad range of asset classes and sectors.”


Investment Week

Institutional fixed income investors set to take on greater risk in 2024

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