Schroders: "Investors Continue Focus on Decarbonization and Deglobalization Investment Trends"

Global Investor Study 2024 Results Announced
Private Market Investment Growth Continues
Central Bank Policies · High Interest Rates · Potential Recession Concerns

Overseas investors identified factors such as ▲central bank policies ▲high interest rates ▲potential economic recession as more influential in shaping asset prices than political issues like the U.S. presidential election.

Schroder Investment Management released the results of the ‘Schroder Global Investor Insight Survey 2024.’ According to the 2024 Investor Study, investors are increasing their allocations to global equities and private equity in line with trends in decarbonization, deglobalization, and demographic changes.

Among the investors surveyed, 51% said they plan to increase their allocation to global equities over the next two years. 44% of respondents are considering expanding their allocation to active equities, and 39% expressed interest in thematic equities. Among institutional investors, 30% plan to increase investments in the energy transition sector. The most important factors in this theme were identified as portfolio decarbonization, diversification, and the ability to generate returns.

Schroder analyzed that the growth trend in private markets will continue. More than 80% of investors have already invested in or plan to invest in private markets. Institutional investors and high-net-worth individuals regard private markets as a core component of their portfolios. The main reasons for allocating assets to private markets are higher returns and effective portfolio diversification.

More than half (53%) of all respondents hoped to allocate more assets to private equity over the next two years. Preferences were high for private debt and renewable energy infrastructure equities. The proportion of institutional investors and gatekeepers considering proactive allocation to the energy transition and decarbonization sectors through private markets over the next two years reached 57%. 42% considered allocations to sustainability and impact investing.

Georg Wunderlin, CEO of Schroder Capital, explained, "Private markets are a key source of funding needed for fundamental structural changes such as decarbonization, deglobalization, demographic shifts, and the artificial intelligence (AI) revolution, providing capital in creative and long-term ways. Investors recognize the potential of private assets to drive positive change and achieve higher returns."

George Brown, Schroder’s Chief U.S. Economist, said, "Recently, as inflation has decreased and concerns about growth have emerged, expectations have revived that U.S. interest rates could fall significantly. Central banks around the world are adopting easing policies to reduce the burden of high interest rates on growth, which will create a favorable environment for risk assets such as equities."

Respondents viewed higher-than-expected inflation or slowing growth (62%), central bank policies (60%), and political risks (57%) as threats to bond market investments (Figure 5). Johanna Kyrklund, Schroder’s Chief Investment Officer, stated, "High public debt levels are a key concern in several major economies, and the core risk is that the growing debt burden could ultimately seriously undermine the stability of the bond market."

A Schroder Korea representative said, "It is important to enable not only institutions but also individual investors to benefit from private market investments. In recent years, fund structures targeting individual investors have diversified significantly, greatly improving accessibility to private asset classes."

The survey was conducted from June to the end of July among approximately 3,000 investors residing in 33 regions including North America, Europe, the Middle East and Africa, the UK, Asia Pacific, and Latin America. The total assets managed by pension funds, asset management firms, insurance companies, and public institutions surveyed amount to approximately $74.5 trillion (about 10,286.2 trillion KRW).