The global economy is experiencing unprecedented levels of uncertainty, with investors increasingly turning to active management to strengthen portfolio resilience and capture specific investment opportunities. A recent survey by Schroders, a leading global financial services company, has found that four in five institutional investors and wealth managers are more likely to increase their use of actively managed investment strategies in the coming year. The survey, which involved nearly 1,000 investors with assets under management of $67 trillion, revealed that portfolio resilience was the top priority for investors over the next 18 months. This is not surprising, given the significant market volatility that has occurred in recent times, largely due to the US government’s decision to introduce wide-ranging trade tariffs. The tariffs, selected by nearly two-thirds of respondents as the biggest macroeconomic concern, have fuelled investors’ focus on portfolio resilience. In fact, a staggering 82% of investors who prioritised portfolio resilience said they are increasingly looking to harness active management to achieve this goal. Active management is seen as essential in today’s fragmented markets, where investors are seeking a selective and adaptable approach to manage complexity and create portfolio resilience. According to Johanna Kyrklund, Group Chief Investment Officer at Schroders, “Active management is indispensable amid today’s fragmented markets. With four in five investors set to increase their allocation to actively managed strategies this year, it’s clear they value a selective and adaptable approach.”

The survey also found that investors are actively seeking selective opportunities to generate returns through exposure to both public and private markets. Public equities and private equity have emerged as the preferred asset classes for return generation in the current environment. Notably, more than half of investors believe that public equities will deliver strong returns, and that global equity allocations will deliver the strongest performance. However, investors are not just focusing on public equities. Small-to-mid cap buyouts in private equity are seen as compelling by 65% of investors, reflecting a pivot towards high-conviction investments with transformative growth potential and more likely to be insulated from global trade tensions. In addition to seeking returns through public and private markets, investors are also looking to income generation as a key source of returns. The survey found that income generation is evolving from a traditional fixed income allocation to multi-channel, risk-adjusted sources encompassing traditional bonds, corporate debt and asset classes within private debt and credit alternatives. PDCA, or private debt and credit alternatives, was the most attractive allocation option for global investors looking to generate income over the next 12 months, selected by 44% of investors. The rise of alternative income sources is striking, with infrastructure debt and securitised products emerging as popular alternatives to direct lending. Amongst wealth managers who selected PDCA, nearly two-thirds ranked securitised products as the best opportunity for risk-adjusted returns, followed by infrastructure debt and then direct lending. Overall, the survey highlights the growing importance of active management in today’s economic environment. As investors seek to strengthen portfolio resilience and capture specific investment opportunities, they are increasingly turning to active management as a key strategy for achieving their goals.

Key Findings

• 80% of investors are more likely to increase their use of actively managed investment strategies in the year ahead. • Portfolio resilience is the top priority for investors over the next 18 months. • 82% of investors who prioritise portfolio resilience are increasingly looking to harness active management. • Public equities and private equity have emerged as the preferred asset classes for return generation in the current environment. • Small-to-mid cap buyouts in private equity are seen as compelling by 65% of investors. • PDCA, or private debt and credit alternatives, is the most attractive allocation option for global investors looking to generate income over the next 12 months. • 44% of investors selected PDCA as one of their top three income generators for the year ahead.

Investment Strategies

• Active management is seen as essential in today’s fragmented markets, where investors are seeking a selective and adaptable approach to manage complexity and create portfolio resilience. • Investors are actively seeking selective opportunities to generate returns through exposure to both public and private markets. • Public equities and private equity have emerged as the preferred asset classes for return generation in the current environment. • Small-to-mid cap buyouts in private equity are seen as compelling by 65% of investors. • Income generation is evolving from a traditional fixed income allocation to multi-channel, risk-adjusted sources encompassing traditional bonds, corporate debt and asset classes within private debt and credit alternatives.

Asset Classes

• Public equities: 46% of investors prefer this asset class for return generation. • Private equity: 45% of investors prefer this asset class for return generation. • PDCA (private debt and credit alternatives): 44% of investors prefer this asset class for income generation. • Infrastructure debt: 41% of investors prefer this asset class for income generation. • Active public corporate bonds: 33% of investors prefer this asset class for income generation.

Income Generation

• Income generation is evolving from a traditional fixed income allocation to multi-channel, risk-adjusted sources encompassing traditional bonds, corporate debt and asset classes within private debt and credit alternatives. • PDCA, or private debt and credit alternatives, is the most attractive allocation option for global investors looking to generate income over the next 12 months. • Infrastructure debt and securitised products emerge as popular alternatives to direct lending. • Securitised products are ranked as the best opportunity for risk-adjusted returns by 64% of wealth managers who selected PDCA. • Infrastructure debt is ranked as the best opportunity for risk-adjusted returns by 60% of wealth managers who selected PDCA.

Conclusion

The survey highlights the growing importance of active management in today’s economic environment. As investors seek to strengthen portfolio resilience and capture specific investment opportunities, they are increasingly turning to active management as a key strategy for achieving their goals. The results of the survey demonstrate the growing demand for selective investment strategies and the need for investors to adapt to the changing economic landscape.