Institutional Outlook: Forecasting Dynamic Changes

Institutional investors anticipate a year of dramatic change in 2017. A global wave of populism is upending conventional thinking about politics and economics. Central bank policies, which have driven investment performance for nearly a decade, are beginning to diverge. The U.S. Federal Reserve is likely to raise rates, while other central banks are challenged to scale their asset purchase programs. The upshots are concerns among institutional investors about volatility, geopolitical risk, and monetary policy, which we see them addressing using a three-part approach: On the heels of a tumultuous political year, institutional investors believe that geopolitical volatility will translate into market volatility for investors in 2017. Navigating the volatility will mean resetting investment priorities and revisiting investment strategy.

1 Dispersion refers to the variability of returns among individual indexes and stocks within each index.
2 Diversification does not guarantee a profit or protect against loss.
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2016 Global Institutional Investor Survey

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