More than half of institutional investors (56 per cent) have increased their appetite for risk over the past quarter, according to the latest Risk Rotation Survey by ING Investment Management International (ING IM).
Meanwhile, only 11 per cent of investors stated that they had decreased their risk appetite in Q4 – a fall from 18 per cent three months earlier
This willingness was reflected in attitudes to asset classes, with appetite for equities rising further amongst investment professionals (73 per cent sees it as favourite asset class); an increase from 64 per cent in Q3. Real estate came in second at 45 per cent, up from 34 per cent over the same period.
ING Investment Management’s head of strategy multi-asset, Valentijn van Nieuwenhuijzen, says: “An increase in risk appetite amongst investors is definitely a promising sign as we head into 2014. With more than half of respondents stating that their appetite had increased over the past six months, it indicates that investors are feeling more positive about the global economy.”
In terms of the greatest threats to investment portfolios, the removal of quantitative easing and interest rate rises are causing the most concern, with one in five (19 per cent) respondents citing them as a ‘very significant’ factors. The Eurozone crisis also remains high on the agenda of institutional investors with 37 per cent citing it as a concern. This compares favourably to the previous quarter when 54 per cent stated the same.
Institutional investors are also showing growing confidence in Japan with 60 per cent of respondents stating that Abenomics would be effective in reviving the world’s third-largest economy, compared to 37 per cent in the previous quarter. Only five per cent of respondents in the latest survey believed that it would be either ineffective or damaging versus 16 per cent in Q3 of last year.
Van Nieuwenhuijzen says: “What we are seeing is the most synchronised global recovery since 2009. More noteworthy than the level of optimism is the degree of consensus that simultaneously seems to have emerged amongst market participants; with stronger growth and less shock risk on the horizon, most agree that equities are the most attractive asset class, with Europe and Japan coming out as the preferred regions in 2014.”