Institutional Investors Get Ready for a Wild Ride
According to a fresh poll from Natixis Investment Managers, more than half of the big players in the market are already eyeing the next financial circus. They’re betting that a global crisis could pop up anytime within the next 1–5 years, and they’re especially wary about the impact of passive funds on the whole system.
What’s Got Them Nervous?
- Interest rates and sudden volatility spikes are topping the worry list for the year ahead.
- About 70% of respondents think the next big financial drama will happen within five years.
- They’re predicting that the chaos which shook markets in Q4 will keep rolling into 2019.
- The long-running US bull market is set to hit the brakes.
- Bond markets are expected to get stormy while equity markets will do the same as rates climb.
- Potential asset bubbles are looming over crypto, tech, stocks, and real estate.
“It’s not just market volatility that’s biting here,” Natixis notes. “Geopolitics, trade wars, and pulling back from quantitative easing are all going to smack hard on portfolio returns.”
The Passive Gold Rush Problem
While passive funds enjoy a bandwagon of inflows, two-thirds of institutional investors believe this trend is beefing up systemic risk. Many feel that:
- Passive inflows have low-key been dampening market noise.
- They’re messing with how shares price relative to risk and return.
The survey says most folks are sticking to a roughly 70% active / 30% passive mix for the next three years—and that they’re leaning even more heavily on active managers while the 2019 turbulence gets underway.
Confidence Amid Chaos
Despite all the red flags, more than half of investors are happy to be facing down the predicted roller coaster. Oliver Bilal, head of international sales and marketing at Natixis, says:
“In a nutshell, institutional investors have figured out the sweet spot between active and passive. The growth of passive allocations is slowing down because people are starting to worry about the risk they’re adding to the market infrastructure.”
He adds, “And when the market dips, active managers are the go-to’s. People want a skilled pro steering the ship.”
Who’s Getting the Survey?
The survey reached about 500 institutional fund managers worldwide—corporate and public pension funds, insurance funds, sovereign wealth funds—spanning North America, Latin America, the UK, Europe, Asia, and the Middle East.
And that’s a wrap on a headline‑topping, sandbox‑sized glimpse into what big money figures were thinking as the year glides toward a potential crisis. For this article (originally in The Business Times), reproduction permission is required.
