In a Chaotic Year, Downward Trend of Asset Owners Planning to Hold More Cash

Posted on 09/15/2020

The Sovereign Wealth Fund Institute (SWFI) conducted its 13th consecutive quarterly asset owner survey that was published in September 2020, which had participation from sovereign wealth funds, pensions, and other institutional investors (non-asset managers). One of the major trends from a number of quarters, is the deceleration of asset owners planning to increase cash weighting in relation to asset allocation. Most of the respondents of the survey series have a long-term nature. One can interpret that larger public asset owners have enough cash on hand, and are planning to identify and rebalance their portfolios in this volatile time.

SWFI Global Asset Owner Survey Series: Asset Owners Planning to Increase Cash Allocation in the Next 12 Months

The y-axis is the percent of asset owners planning to increase cash allocation in the next 12 months. Possible survey answers: Significantly Underweight, Underweight, Same, Overweight, Significantly Overweight. Overweight ratio = Overweight, Significantly Overweight.

In the September 2020 survey, more institutional investors plan or have already overweighted U.S. equities and global equities, showing that SWFs and pensions are rebalancing, after the COVID-19 March market shock, that was answered by the Federal Reserve’s monetary measures of larger central bank swap lines, bond buying, and more spending facilities to support credit markets.