Bullish on Earnings, Sovereign Funds and Pensions View Rate Risk as Greatest Threat Toward Financial Stability

Posted on 06/14/2021


SWFI Releases Global Asset Owner Survey for June 2021

Seattle, Washington, June 14, 2021: SWFI has released its 16th consecutive survey on global asset owners. The asset owner survey is an important measure of global asset owner sentiment and tracks quarterly medium and long-term changes of the views held by these investors. The findings are released on a limited basis to institutional investors that participate as well as news organizations and subscribers to SWFI data services. The survey sample includes sovereign wealth funds, pensions, superannuation funds, and other institutional investors.

The sample group of investors is estimated at US$ 1.587 trillion.

With record optimism in the well-recognized survey’s history, public institutional investors including SWFs and pensions believe listed companies will have better earnings in the coming months. The survey shows that pensions and sovereign funds believe that there will be improved earnings for listed companies over the 12 months, but interest rate rises pose the greatest risk to financial market stability. The pandemic risk option dropped fast even below geopolitical risk with regard to the financial market stability question. The asset owner respondents preferred listed companies to increase capital spending vs. building cash reserves, a stark reversal from June 2020, in which building cash reserves was the second-most picked option before improving the balance sheet.

Michael Maduell, Chairman of SWFI states, “As COVID recedes from the thoughts of many corporate executives, public funds forecast companies generating higher earnings, while inflation becomes far more visible in everyday life. The question remains when the Federal Reserve and its peers will raise interest rates.”

He adds, “Sovereign funds have positioned themselves in an inflation environment by betting on data centers, rotating toward renewable energy infrastructure, and embracing larger private equity investments.”

Furthermore, public funds continue to seek out private market investments vs. public investments when it comes to weighting and asset allocation.

Subscribers can access the survey at SWFI.com (SWFI Global Asset Owner Terminal) under the Reports tab (then Survey tab).

Believes Earnings Expectations for Listed Companies will Rise by More than 10% in the Next 12 Months

Period Percent Yes
Jun 2021 68.4%
Mar 2021 59.3%
Dec 2020 47.6%
Sep 2020 41%
Jun 2020 28.20%
Mar 2020 9.40%
Dec 2019 17.10%
Sep 2019 7.10%
Jun 2019 18.80%
Mar 2019 21.10%
Dec 2018 21.10%
Sep 2018 38.90%
Jun 2018 50.00%
Mar 2018 44.00%
Dec 2017 30.80%
Sep 2017 31.60%

*Percentages are rounded.

About SWFI
Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. SWFI facilitates sovereign fund, pension, endowment, superannuation fund, and central bank events around the world. SWFI is a minority-owned organization.

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