Institutional Investors Aim to Generate Sizable Returns Due to Higher Volatility, Report Reveals

According to a new research report by quant technology provider SigTech, a majority of institutional investors “anticipate the higher volatility regime persisting and expect to generate stronger returns over the next two years compared with the past decade.”

The SigTech Institutional Investors Report 2022 “surveys more than 100 leading institutional investors from around the world to gain an understanding of their current market outlook and its implications for existing portfolio allocations.”

Other key findings include:

  • 63% of investors surveyed identified inflation as the most significant portfolio risk, with rising interest rates second
  • 66% of investors expect to increase their allocation to hedge funds over the next two years. This trend is particularly noticeable among larger institutional investors
  • 80% of investors expect to increase their budget for data and tech infrastructure over the next two years
  • 69% of investors plan to increase the level of assets managed in-house

Daniel Leveau, SigTech’s VP of Investor Solutions, said:

“Against a backdrop of abrupt changes to the macroeconomic environment, a sharp shift is underway within the financial markets, which has forced institutional investors to reassess their asset allocations. It is no surprise that there is a strong desire to improve on the status quo by embracing both new investment ideas and technological innovations.”

The research report also found “that the strongest conviction for the equity market among investors was that value stocks will outperform growth stocks, and that the US will lose its market leadership to European and EMEA stock markets.”

Despite the significant growth in sustainable investing, the study also found “that investors expect stocks with strong ESG credentials to underperform.”

To access the full report, check here.

As noted in the update,  SigTech offers “a SaaS quant technologies platform to institutional investors, hedge funds, and asset managers so they can focus on what they do best – investing.”

Specializing in macro strategies and cross asset allocation with operationally-ready datasets across a wide range of financial instruments, SigTech provides “the quant infrastructure needed to accelerate the process of creating and managing data-driven investment strategies.”

Their platform “ingests, cleans and validates financial data, and provides the tools to research, build, and deploy customized strategies – powering signals to generate alpha.”

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