Infrastructure is the most favoured asset class among the world’s largest pension and sovereign wealth funds, while the demand for real estate has fallen away sharply, according to the Official Monetary and Financial Institutions Forum (OMFIF).
Its survey of the 50 largest public pension funds and 50 biggest sovereign funds found that a net 40% of respondents expect to increase their exposure to infrastructure over the next 12 to 24 months, broadly the same as last year.
But net 13% of funds expect to reduce their holdings of real estate – a sharp drop on the two previous years, when the survey found real estate to be the most attractive asset class alongside infrastructure.
OMFIF suggested that the “expectation that monetary policy will remain tight presumably explains why, in stark contrast to last year, surveyed funds now indicate a shift away from real estate assets”.
This year’s survey observed a continuation of the trend started last year towards inflation-proofing portfolios. OMFIF said inflation remained a key concern for global public funds in the near and long term and that the demand for infrastructure was consistent with this finding.
Corresponding with fears of persistently high inflation, more funds in the sample are expected to decrease than increase their allocation to cash and conventional government bonds.
The survey covered large global investors with collectively US$25.9trn (€23.6trn) of investment capacity.
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