A recent Clearwater poll revealed the ongoing COVID pandemic continues to impact investment strategies. More than a third of investors surveyed said their investment strategies will change this year in response to the pandemic.
At Clearwater, we wanted to get a better understanding of how the pandemic is shaping investment strategies. We polled more than 140 asset managers and owners representing more than $5 trillion in AUM to gain insight into changing strategies.
Our survey asked how their investment strategy changed at the start of the pandemic in 2020 and how that compares to what they have planned for 2022 in the wake of the recent omicron surge. We expected to see changes given the many unknowns and related market volatility early in the pandemic relative to what investors are dealing with today – and we did. At a macro level, 58% of companies reported making changes to their strategy in 2020, albeit only 13% said the change was material. Looking forward from today, 34% plan further changes to their strategy and 5% said they will be material changes. Although these numbers are much lower than 2020, it’s still a meaningful percentage.
Investors’ early reaction to COVID was biased toward conservatism, with liquidity increases, fixed income duration decreases, and credit quality increases, but tempered with meaningful increases to equities. Current plans show companies largely holding the course but continuing the trend of focusing on private assets while finetuning the profile of their fixed income portfolio. Their responses suggest investors have learned to live with COVID as our society tries to do the same. More detailed observations for the two periods follow.
Early COVID pandemic impacts on investment strategy
Current COVID impacts on investment strategy
We also asked participants about the other non-investment aspects of their business, such as insurer underwriting results. Like our daily lives, COVID’s pervasive impact was evident in the responses. Sixty-two percent reported COVID has impacted their business and 12% reported it was a material impact.
We also threw in a question about the respondents’ return of office plans. Like other surveys, we found that the majority, 58%, of these financial industry companies are currently operating on a hybrid office-remote model, with only 20% back to the office full-time. Further, the long-term effects of COVID on the way we work was evident with 63% saying these changes are permanent.
We are glad to share detailed statistics from our survey, please visit our website to download them here.