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A New Dimension to Benchmarking Portfolio and Organizational Performance
For almost 20 years, Fidelity has been conducting primary research to understand decision-making among institutional investors and provide a benchmark for firms of varying types and sizes. Using a new framework we call the Investment Innovators Curve, this year's study seeks to help firms define and understand the philosophical drivers of their organization and their investment approach.
With macroeconomic changes potentially on the horizon, organizations are beginning to see headwinds that will pressure them to squeeze returns out of lower yields and with a higher risk profile. This may be a natural time for reflection on how your firm will navigate these changes. We believe that adapting and applying the Investment Innovators Curve can provide investors with new and meaningful insights into the levers that they and their peers push on while pursuing their portfolio objectives.
Investment leaders can consider where they sit on the Investment Innovators Curve,* based on their organization's ability and willingness to experiment with new investment approaches or asset classes. Where does your firm fall on the curve?
Investment Innovators Curve
"We are frequently one of the first to try a new asset class or investment approach, even if it's extremely new and/or unproven."
"We are not the first to try a new asset class or investment approach, but will quickly follow if we notice others are trying it.
"We are curious about new asset classes or investment approaches, but are more pragmatic. We'll wait until it's more common/ established before investing."
"We adopt a new asset class or investment approach out of necessity. Once it's mainstream and has clear, demonstrated value, we'll invest in it."
"We are very risk-averse when adding new asset classes or investment approaches to our portfolio. We would rather be late to a new investing trend than bear the potential risks involved with new approaches."
*Adapted from ideas in Diffusion of Innovations, by Everett Rogers (New York: Free Press, 5th Edition, 2003).
- Unless otherwise noted, all data are from the 2021 Fidelity Institutional Innovation Study, which polled chief executive officers, chief investment officers, treasurers, and other investment executives at 500 institutions in the U.S. At the time of the survey, these institutions represented $12T (USD) in assets under management, across public sector defined benefit plans, corporate defined benefit plans, insurance companies, defined contribution plan sponsors, endowments and foundations, family offices, private banks, and sovereign wealth funds. Respondents were asked a range of questions about their portfolio objectives, market perspectives, asset allocation, investment philosophy, and investment process. Fidelity Asset Management Solutions (FAMS) conducted the survey from May to July 2021. The survey was executed in association with global research consultancy CoreData Research. All respondents completed an online questionnaire, which was then supplemented by 11 in-depth qualitative interviews with survey respondents at pensions, as well as with endowments and foundations.