New horizons
The triple impact of the Covid-19 pandemic, the return of inflation and conflict arising from heightened geopolitical tensions ripped up the typical public fund’s playbook. But while the last of these factors remains in play, the easing of concerns about inflation is allowing these influential investors to go back to a more risk-on, long-term approach.
This is a key message that emerges from OMFIF’s Global Public Funds 2024 report, informed by surveys, discussions and contributions from 28 global public pension and sovereign funds with more than $6.5tn in assets under management. Over the long term, these investors are assessing the impact that technological change – such as the growth of artificial intelligence – will have both on the way they manage their portfolios and risk assessments internally, but also on how it will affect the markets in which they invest.
Key findings:
- Close to 60% of survey respondents said that technological change or equilibrium real interest rates are the most important factor shaping their 5-10-year investment strategies.
- For the third successive year, infrastructure is most in demand with close to 60% looking to increase their allocation. And more than 40% are looking to move towards private credit or private equity over the next 12-24 months.
- 25% expect to reduce their cash holdings, suggesting there is appetite to take on more risk.
- 56% think they can make the biggest impact on transition finance via private equity, compared to 25% through public equity.
- 58% selected India as the most attractive emerging market, up from 38% a year ago.
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