Balanced expansion, embracing sustainability
GLOBAL public investors are a powerful force in financial markets. With assets under management at $39.5tn invested across many countries, currencies and asset classes, shifts in their preferences can move existing markets and help develop new ones. Our analysis of dynamics in GPI asset allocation confirms that these investors are fairly conservative, prioritising safety and liquidity, and preferring government bonds and developed markets. Challenged by low or negative yields on these assets in recent years, many are starting to venture more forcefully into riskier and less liquid asset classes such as equities, a trend that continues cautiously. However, the pandemic shock and related policy responses, including the accelerated expansion of central bank balance sheets, is leading GPIs to re-evaluate their priorities. Covid-19 has made clear the serious threat that non-financial risks pose to economic and financial activity, prompting GPIs to accelerate the alignment of investment strategies with sustainability objectives. This year’s asset allocation analysis results are based on the most robust sample of GPIs ever examined. A total of 78 institutions responded to the OMFIF GPI Survey 2020. In-depth interviews with a further set of institutions, as well as data disclosed publicly in annual reports, complement our research. This brings the total number of institutions to 92 funds from 61 jurisdictions, covering $19.5tn of AUM.