Despite Mounting COVID Cases Globally, SWFs and Pensions Sees Biggest Risks to Portfolios via Interest Rates

Posted on 01/03/2022

SWFI’s survey results are in for the fourth quarter of 2021. Now in its 18th consecutive edition, the survey provides exclusive data from Chief Investment Officers, Portfolio Managers, Strategists, and other asset allocators from sovereign wealth funds, pension funds, and endowments. The panel members are almost exclusively investing for a longer time horizon of a year or more. In looking at the data, a few snapshots quickly stand out. One trend that was established in our last quarterly survey has worsened to some extent. Only 41.6% are now expecting an increase in earnings of 10% or more in the next 12 months. The remaining 58.4% is not expecting such an increase. In Q3, 45% expected an increase, and in Q2, 68% were expecting it. It’s also noticeable that coronavirus variants, including Omicron, are not causing undue stress on financial experts. In each category for which it was relevant, those who considered the virus an ongoing threat to their investments were a small minority. A set of other figures, and comparisons with earlier notations, set against the backdrop of world economies pushing forward in the most unusual of circumstances, warrants an in-depth look.

The survey is available online at under the Reports tab.

For three consecutive surveys conducted quarterly, the largest potential risk for financial market stability is an interest rate increase risk. Inflation and geopolitical risks are concerns. Come 2022, the Federal Reserve is expected to raise interest rates to fight inflation. But will it really happen?

In addition, a clear majority of allocators are underweighting cash and U.S. passive fixed income in the next twelve months, and overweighting private equity, credit strategies, private infrastructure, and active international equites. U.S. equity markets and real estate received mixed results in allocation weights.

Next Issue of the Sovereign Wealth Quarterly.

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