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The results of the CIO Sentiment Survey broken down into investment impact and themes

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Five years ago

Comparisons with 2017 data and findings from the CIO Sentiment Survey make for interesting closing thoughts given institutional investors longer-term lens.

The 2021 CIO Sentiment Survey shows that investors are much more confident in hitting their return targets today than they were five years ago.

This year, 60 per cent of 2021 survey respondents have voiced their confidence in meeting their return target. In contrast just 27 per cent said the same in 2017 when the majority (47 per cent) reported uncertainty about their ability to hit returns, refusing to lock in numbers.

The return targets of survey respondents over the last five years have varied from less than 3 per cent to over 5 per cent with the majority of 2017 and 2021 respondents saying they had a return target greater than 5 per cent. In contrast, in the tougher years of 2018 and 2019, the majority of funds said they targeted returns of between 3-5 per cent.

"The 2021 CIO Sentiment Survey shows that investors are much more confident in hitting their return targets today than they were five years ago."

Confidence in meeting return targets

47%
27%
27%
2017
47%
18%
57%
2018
56%
44%
2019
49%
51%
2020
25%
15%
60%
2021

key:

Yes
No
Uncertain

Comparisons with 2017 data and findings from the CIO Sentiment Survey make for interesting closing thoughts given institutional investors longer-term lens.

The 2021 CIO Sentiment Survey shows that investors are much more confident in hitting their return targets today than they were five years ago.

This year, 60 per cent of 2021 survey respondents have voiced their confidence in meeting their return target. In contrast just 27 per cent said the same in 2017 when the majority (47 per cent) reported uncertainty about their ability to hit returns, refusing to lock in numbers.

Investors in 2017 and today may not share the same confidence in meeting return targets, but investor sentiment in 2017 and 2021 does compare in one important way – risk on.

"In 2017, 31 per cent of CIO survey respondents said they were taking on more risk to achieve their target returns comparable to 38 per cent of 2021 respondents."

In 2017, 31 per cent of CIO survey respondents said they were taking on more risk to achieve their target returns comparable to 38 per cent of 2021 respondents.

This, in stark comparison to the risk-off intervening years of 2018, 2019 and 2020 when the vast majority of survey respondents said they had no intention of taking on more risk to meet their returns targets – 83 per cent, 90 per cent and 72 per cent respectively.

In other points of distinction, the 2017 survey found investors focused on reducing asset manager fees via harder negotiation and insourcing more investment.

Taking more risks to meet return targets

65%
35%
2017
83%
17%
2018
90%
10%
2019
27%
10%
2020
3%
5%
2021

key:

No
Yes

About half of 2017 respondents said they would allocate more to passive or smart beta strategies as a way of reducing costs. That despite investment costs being lower than today with 2021 data revealing 80 basis points investment costs relative to assets for the second year in a row.

Investors in 2021 are opting for more active strategies to take advantage of market dislocations over favouring passive but also cite high investment costs as the enduring bug bear. Higher fees on products and increasing allocations to alternatives in search of diversification has driven up product fees by 25 per cent compared to 2020.