International wholesale investors do not expect to increase their allocation to private markets significantly from current levels, and remain positive about the case for public markets, despite recent global economic headwinds.
That’s according to the results of a survey of 800 European and US fund buyers, consultants, and wealth managers, commissioned by RBC BlueBay Asset Management (RBC BlueBay).
Respondents are currently allocating 22% of their portfolios to private markets, and do not expect to significantly increase this allocation over the next three to five years. Whilst just over half of respondents expect public markets to outperform private markets over the next five-10 years.
Asked for their views on how current market volatility will affect the investment case for public equities and fixed income, 46% of intermediary investors argue that it hasn’t changed the case for investing in public markets, with the remaining respondents split in equal measure between supporters and detractors.
The case for public markets is further reinforced by respondents’ asset allocation priorities over the next three years. In fact, equities and fixed income remain the primary allocation choices for 31% and 26% of respondents respectively, ahead of other asset classes. With the preferred approach by the majority of respondents (77%) being active over passive.
Nevertheless, half of respondents agree that investors will struggle with returns due to inflation for at least the next three years – US wholesale investors are the most pessimistic of all regions with 59% expecting a drag on returns over 5 years. Most international wholesale investors (39%) expect portfolio returns to hover in the 5-6% over the next 3-5 years.
