Political risks and the search for yield are pushing some North American institutional investors toward more tactical decisions. Investors are focused on reallocating to equities and using alternative investments to mitigate risks.

1. Political risks top investor concerns
Political uncertainty
Mispricing of risk
The growth cycle
Portfolio diversification
Market volatility
Inflation
Corporate governance
42%
35%
33%
32%
31%
13%
13%
In North America, risks drive reallocation to equities
of North American investors also see
short-term volatility as the biggest risk
to achieving long-term targets.
Political risks and the search for yield are pushing some North American institutional investors toward
more tactical decisions. Investors are focused on reallocating to equities and using alternative
investments to mitigate risks. While many are taking a wait-and-see approach and holding on to
investments for longer, other investors are showing a willingness to increase portfolio churn and
reduce holding periods.
North American investors: Main challenge in meeting objectives, % respondents, select two choices
Sources: The Economist Intelligence Unit survey, June-July 2017
Copyright: © The Economist Intelligence Unit Limited, 2017
CHANGES ON THE
INSTITUTIONAL
INVESTMENT HORIZON
Sponsored by:

2. 78% of North American investors say
US regulatory uncertainty has led them
to reallocate to a particular asset class.
% respondents
To which asset class have you reallocated?
Seeking opportunity from equities while alternatives mitigate risk
Investors seek tactical advantages
Increase use of alternative investments
Diversification of traditional asset classes
Risk budgeting
Currency hedging
Hedging with options
Volatility hedging
47%
45%
36%
34%
25%
13%
% of respondents, select two choices
How do you manage risk?
Investors are reallocating to equities and using alternative investments as one of the top ways to manage risks.
55%
30%
15% Yes,frequently
Yes,sometimes
Nottakingshort-
termactions
Lowyieldsandotherchallengesaredrivingsomeinvestors
toincreasechurnintheirportfolios,reducingholdingperiods.
Is the search for yield leading you to short-term
actions such as increasing portfolio turnover?
In light of low yelds, worsening demographics
andtheneedtogeneratealpha,haveyouadjusted
youraverageholdingperiodtobeshorterorlonger?
% respondents
% respondents
Much longer
Somewhatlonger
No
Somewhatshorter
Much shorter15%
16%
33%
9%
26%
Equities
Commodities
Fixed income
Alternatives
52%
7%
18%
21%
CHANGES ON THE INSTITUTIONAL
INVESTMENT HORIZON
Sources: The Economist Intelligence Unit survey, June-July 2017
Copyright: © The Economist Intelligence Unit Limited, 2017
Sponsored by: