The annual investor survey by consultant bfinance has found that investors are concerned about volatility as a result of the start of Fed tapering.
The survey covered European and North American pension funds with combined assets of $275 billion. Commenting on the findings, bfinance head of public markets and alternatives, Chris Jones, said: “Institutional investors foresee volatile times in 2014 and have prepared or are getting prepared for a bumpy road ahead in a variety of ways. If this anticipated volatility occurs, investors will have to stay nimble throughout the year, not only to control the risk and downside in their portfolios, but also to take advantage of the investment opportunities such volatility can create.”
According to the findings, 40% of investors have taken action to protect portfolios from the possible adverse effects of tapering, while confidence in smart beta and absolute return strategies has risen, with 59% of investors planning to use alternative indices. More than half of the survey respondents do not expect interest rates to rise before 2015, if at all, while 75% plan to take advantage of the bond market volatility that tapering is expected to cause.