New Research Reveals Emerging Trends Among
Institutional Investors and Alternative Investments
BOISE,
Idaho, April 26, 2023 /PRNewswire/ -- Clearwater
Analytics (NYSE: CWAN), a leading provider of SaaS-based
investment management, accounting, reporting, and analytics
solutions, today announced the release of the 2023 Investor Pulse:
Alternative Investors Undeterred by Economic Uncertainty study.
Polling over 200 institutional investors, including insurers,
wealth and asset managers, corporates and government, pension and
endowments with $10 trillion in
assets under management (AUM), the report looks into the key
trends, challenges, and successes that institutional investors are
prioritizing, given the last 12 months of economic uncertainty.
"Despite wide-ranging market events, from an overall uncertain
economic outlook to dramatic increases in interest rates and
related inflation, to the most recent challenges in the banking
sector, the findings of our study reveal that investors have
altered their investment strategies and continue their focus and
allocation to alternatives," said Scott
Erickson, CRO at Clearwater Analytics. "We launched this
research to learn how market events are shaping interest and
investments in alternatives and what it could mean for the space as
the year continues to play out. As the survey indicates, for
investors to effectively manage their industry exposures, they
require greater transparency to their alternatives portfolio in
order to manage risk and increase yield in the current market
environment."
Download the 2023 Investor Pulse: Alternative Investors
Undeterred by Economic Uncertainty study today. Key findings in
this year's report include:
Bumpy Economy Boosts Appetite for Alternatives
Per the study's findings, alternatives continue to be viewed
favorably. A majority of investors (72%) said that the current
economic climate has had a positive impact on their appetite for
alternatives. When asked what is fueling these positive views, 35%
said it was because of opportunities for diversification, 20% said
it was because they expect alternatives to outperform public asset
classes, and 17% said it was because of lower volatility. At the
same time, 39% said that they "believe all markets will suffer if
the economy falters."
"Most investors are wary of the entire investment universe.
However, it seems that many believe alternatives to be a good place
relative to other market options," said Erickson. "The extended low
yield environment drove many investors to invest in alternatives,
now rates are up, markets are uncertain and investors are staying
the course, if not adding to alternatives. Whether it is in
relation to lower volatility or increased diversification,
investors are continuing their focus on alternatives, and as the
economy continues to stumble, we expect this trend to
continue."
Investors Unmoved by Rate Hikes in Relation to
Alternatives
Per the study's findings, 58% of respondents said that rate
hikes had no meaning or impact on their appetite for alternative
investments, while 27% said that rate hikes made them more
interested in alternatives and 16% said they became less
interested.
"Investors were driven to alternatives in recent years due to
the prolonged period of low rates, and as interest rates have
spiked, naturally there have been suggestions that these higher
rates might ultimately dampen investors' appetites for
alternatives," said Erickson. "However, our research has found that
not only are most alternative investors unmoved by these spikes, a
significant number of respondents actually said they have become
more interested in the space as rates have risen."
Alternatives Investment Transparency Significantly
Lacking
According to the study's findings, only 28% of respondents said
that they felt they had the required level of transparency into
their alternative investments, while 67% said their level of
transparency was either "modest" or "limited."
"It is important to remember that alternatives aren't a
homogeneous asset class, and within a given segment, industry
exposures can vary dramatically," said Erickson. "Investors want to
manage their industry exposures and that requires transparency in
their alternatives portfolio. While this is proving to be a major
challenge for many alternative investors today, Clearwater delivers technology to provide
clients with the deep dive views needed to solve this problem."
Banking Challenges Impact Overall Investment
Strategies
According to the study, investors increasing the number of banks
holding their cash and short-term investments (31%), changing the
bank(s) holding their cash and short-term investments (28%), and
reducing debt/bond exposure (28%) were cited as the most common
ways investors had altered their investment strategies in the wake
of the recent banking events.
"Clearly, banking sector challenges are making investors more
cautious," said Erickson. "It is very likely that we will see more
scrutiny on investments in the financial sector and in other
industries that are dependent on bank capital moving forward. These
findings bear out that approaches to banks are changing amongst
investors – at least in the short-term."
About 2023 Investor Pulse: Alternative Investors Undeterred
by Economic Uncertainty Study
Clearwater Analytics surveyed over 200 executives across the
institutional investor space, including insurers, wealth/asset
managers, corporates and government, pension and endowments,
aggregating $10 trillion in assets
under management (AUM) from late February to early March 2023. To learn more, download the 2023
Investor Pulse: Alternative Investors Undeterred by Economic
Uncertainty study.
About Clearwater Analytics
Clearwater Analytics (NYSE: CWAN), a global, industry-leading
SaaS solution, automates the entire investment lifecycle. With a
single instance, multi-tenant architecture, Clearwater offers award-winning investment
portfolio planning, performance reporting, data aggregation,
reconciliation, accounting, compliance, risk, and order management.
Each day, leading insurers, asset managers, corporations, and
governments use Clearwater's
trusted data to drive efficient, scalable investing on more than
$6.4 trillion in assets spanning
traditional and alternative asset types. Additional information
about Clearwater can be found
at clearwateranalytics.com.
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SOURCE Clearwater Analytics