Findings from IFM Investors’ latest Private Markets 700 research suggest that investors are becoming more selective in how they deploy capital, seeking to balance portfolio resilience with long-term objectives. At the same time, evolving economic conditions, shifting regional dynamics and changing expectations are influencing allocation priorities. 

In addition, many investors recognise that their portfolios may not be fully equipped for the risks they are most concerned about. While 55% of investors rank inflation among their three biggest portfolio risks, only 21% say their portfolio is designed to perform across a wide range of economic conditions. This gap is encouraging investors to think more carefully about how resilience is achieved in practice and the role private markets can play in supporting it. 

In this article, John Gee-Grant, Executive Director, Global Head of Client Solutions at IFM Investors, reflects on the research findings and explores how investors are navigating this balancing act, considering what it may mean for portfolio construction, client partnerships and the way investors assess opportunities across private markets.

A More Selective Investment Environment

Investors today are navigating an increasingly complex landscape.

Geopolitics and trade are changing at a pace not seen for a generation, and inflation is proving a persistent challenge for policymakers in many markets. According to our latest survey of 700 institutional investors, 55% consider inflation to be one of the three biggest risks to their portfolio. 

As a result of these pressures, the global investment landscape is shifting, with investors open to a greater range of asset classes and investment strategies as they seek to balance resilience and growth. While investors remain committed to private markets, their focus has changed. 

The proliferation of products offering a route into private markets has raised the profile of the asset class with investors. Increasingly, the question is not one of access, but selection. Investors are becoming more selective in their deployment decisions as they look for the opportunities that may help meet their strategic priorities. 

Inflation is of course not the only factor shaping allocation decisions today. Its corollary – the interest rate volatility that is fuelled by monetary policy – is also among the most cited risks, as is geopolitical instability. A higher-for-longer rate environment, coupled with uncertainty over where rates may move, is leading investors to place greater emphasis on balancing differentiated risk adjusted sources of return rather than relying solely on broader market momentum.

Read the full ‘Thought Leadership’ article at the link below