At Clearwater, we wanted to get a better understanding of how the surge in inflation to 7.5% on the Consumer Price Index (CPI) in 2021 is shaping investment strategies. We polled more than 100 institutional asset managers and owners representing more than $4 trillion in AUM to gain insight into changing strategies. Our survey explored how investors are reacting now and what their expectations are three years out.
In short, just like the average consumer, investors are concerned.
Two-thirds of our respondents see inflation as non-transitory and indicated they expect it will have a material effect on the US economy.
As interest rates are entangled with inflation, we asked about rate expectations and found that a large majority, but not all, expect a 100-200bps increase from current rates. All these concerns are driving changes to portfolio allocation and risk. As you would expect, asset classes like real estate are in focus, while fixed income duration is being curtailed.
Download the full survey to see longer-term inflation and rate expectations, results across asset classes, portfolio risk parameters, and details by type of institutional investor. You can download the full survey results and analysis from Clearwater here.
In case you missed it, Clearwater recently conducted another flash poll earlier this year to find out how investors responded to the COVID-19 pandemic in 2020 compared to now. You can find the results of that poll here.