Asset owners take steps to modify portfolios amid volatile markets

Daniel Brady, chief investment strategist at PNC Asset Management, a group that manages $167 billion in assets for clients including institutions, said stock valuations have fallen significantly and, due to expected volatility persist through 2022, actively managed strategies for closed-end-income portfolios “really make sense, instead of just being passive.”

Private investment opportunities will remain attractive and act as a hedge throughout this year, he added.

“If you’re looking for a private equity allocation, this is a great year to make those allocations…you might want to look into venture capital. And hedge funds are still an opportunity with volatility expected to remain elevated. when looking for a second-half strategy,” Brady said.

Jim McDonald, chief investment strategist at Northern Trust Corp., said that due to the level of uncertainty in the markets, institutional clients may be less likely to make tactical changes to portfolios. However, high-yield bonds are something Mr. McDonald talks about with his clients. “They’re going to be a great performer,” he said. “We think it’s a tactical business here.”

Sweta Vaidya, head of solutions design at Insight Investments, a $1 trillion fixed income manager, said pension fund managers are concerned about equity risk in their portfolios and are considering reducing the risks. “We partner with consultants and advise clients to increase their coverage ratios and have a plan to continue to do so as rates continue to rise over time,” Ms Vaidya said.

Angels Investment Advisors LLCLos Angeles, which manages $8.7 billion for charities and a dozen pension funds, encourages its customers to hold more cash.

The rapid increase in yields, from zero to over 2%, makes this more attractive and provides dry powder when markets are down. Holding cash is not a long-term investment plan as inflation erodes its value, but it is more attractive than the alternatives at the moment and also has option value,” the CIO said. Michael Rosen.

Robert Steyer, Christine Williamson, Douglas Appel and Arleen Jacobius contributed to this article.

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