Research

Fidelity Institutional Investor Study: Some allocators see a critical crossroads, others a well-worn path.

Fidelity evaluates new results from its most recent Institutional Investor Study and offers research and insights to help institutions navigate a profoundly changing backdrop.

By: Fidelity Investments
Updated: 12/19/2023
Key Takeaways
  • Fidelity's Asset Allocation Research Team believes we are in a new investment regime marked by higher interest rates, higher inflation, and higher asset volatility than we have been accustomed to over the past 20 years. Extrapolating past trends into the future is unlikely to be an effective approach to investing given shifting market dynamics and evolving risks.
  • The Fidelity Institutional Investor Study shows that institutions have not significantly changed their approaches to strategic asset allocation, alpha generation, or risk management. The results may reflect institutions' uncertainty about what they should be doing with their longer-term investment frameworks given the new regime, while some may not have conviction about making deeper changes.
  • Many institutions reported some tactical shifts, but said they face continued challenges addressing both the tactical and strategic implications of the new regime. The survey results raise the question: Do institutions have their strategic allocation in order given this changing landscape?
  • Asset allocators should keep in mind that the risk landscape is not new but is evolving based on a new set of variables (e.g., escalating global debt and productivity). Respondents felt more prepared to address inflation and low growth, but less able to address geopolitical tensions and high valuations. Institutions need to adapt accordingly—both for short-term risks and long-term risks, which may require adjustments to strategic asset allocation.
  • The survey showed mixed sentiment on market beta, while views on opportunities from active management are much more skewed to positive. Yet, expected allocations to active strategies have not increased (27%). We also see opportunity in multi-asset inflation protection while survey results showed a significant increase in allocations to real assets.
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