Global Institutional Investors Shifting Risks from Public to Private Markets -- BlackRock Study

Institutions concerned that economic cycle is turning

NEW YORK & LONDON--()--Amid rising concerns about a downturn in the economic cycle, institutional investors are looking to mitigate risks by increasing allocations to private markets according to BlackRock’s annual survey of global institutions.

Globally, over half (56%1) of clients stated that the possibility of the cycle turning is one of the most important macro risks influencing their rebalancing and asset allocation plans. The survey indicates that private markets will be particularly popular in 2019. In a continuation of a multi-year structural trend of reallocating risk in search of uncorrelated returns, illiquid alternatives are set to see further inflows, with 54% intending to increase exposure to real assets, 47% to private equity, and 40% to real estate.

According to the survey of 230 institutional clients, representing over US $7 trillion in investable assets globally, over half (51%) intend to decrease their allocation to public equities in 2019. This shift is accelerating, as 35% of clients planned reductions in 2018 and 29% in 2017. This trend is most pronounced in the U.S. and Canada, where over two thirds (68%) plan to reduce equity allocations, compared to just 27% in Continental Europe.

“As the economic cycle turns, we believe that private markets can help clients navigate this more challenging environment,” said Edwin Conway, Global Head of BlackRock’s Institutional Client Business. “We have been emphasizing the potential of alternatives to boost returns and improve diversification for some time, so we’re not surprised to see clients increasing allocations to illiquid assets, including private credit.”

Fixed income set to attract inflows, cash remains important

Intended fixed income allocations have seen a spike, from 29% planning to increase allocations last year, up to 38% this year. Within fixed income, the shift to private credit continues as over half (56%) of global respondents plan to increase their allocations. Respondents also expect to increase allocations to other fixed income areas, such as short duration (30%), securitized assets (27%) and emerging markets (29%), likely reflecting relative value opportunities in these asset classes.

But the survey also finds that the majority of institutions want to maintain or even increase their cash levels in 2019, especially in the Asia Pacific region, where a third (33%) plan to increase their cash holdings to protect their portfolios.

“The move into fixed income is especially pronounced for corporate pensions, as many defined benefit plans are focused on de-risking, locking in improvements to funded status, and preparing for an end-game”, Conway added.

Shifting priorities within equities allocations – alpha-seeking strategies and ESG on the agenda

While the global trend is to reduce equity exposures over the short term, within equity portfolios, institutions are shifting their focus and priorities. The three most prominent considerations are to reduce public market risk within their portfolios, which was cited by two-fifths (41%), while a third (32%) will look to increase allocations to alpha-seeking strategies and a quarter (28%) will focus more on Environmental, Social and Governance (ESG) strategies and impact investing.

Conway concluded, “In a world of increased market volatility and great levels of uncertainty, clients are reimagining what they do with their risk assets. It’s important for clients to stay invested, with equities continuing to have a very significant role in portfolios and alpha seeking-strategies making particular sense in the current climate. We’re seeing clients becoming more purposeful about their alpha exposures going forward.”


About the survey

BlackRock conducted a global survey of 230 of its largest institutional clients representing over US $7 trillion in assets over a four-week period in November and early December 2018.

Rebalancing survey data2

In 2019, how do you anticipate changing your allocations to the following?
    % increase   % unchanged   % decrease
Equities   14%   35%   51%
Fixed Income   38%   36%   27%
Hedge Funds   16%   66%   18%
Private Equity   47%   43%   11%
Real Estate   40%   50%   10%
Real Assets   54%   41%   5%
Cash   20%   65%   15%
Type of client   % of respondents
Corporate Pension   33%
Public/Government Pension   28%
Insurance Company   20%
Taft-Hartley/Unions/Other   6%
Investment Manager   5%
Endowment or Foundation   3%
Single Family Office /Multi-Family Office   3%
Official Institution   2%

About BlackRock

BlackRock helps investors build better financial futures. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of September 30, 2018, the firm managed approximately $6.44 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit |

This material is for distribution to Professional Clients (as defined by the FCA or MiFID Rules) and Qualified Investors only and should not be relied upon by any other persons. For qualified investors in Switzerland: this document shall be exclusively made available to, and directed at, qualified investors as defined in the Swiss Collective Investment Schemes Act of 23 June 2006, as amended.

Issued in the Netherlands by the Amsterdam branch office of BlackRock Investment Management (UK) Limited: Amstelplein 1, 1096 HA Amsterdam, Tel: 020 - 549 5200.

Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.

In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. This material is for distribution to "Professional Investors" (as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance.) and should not be relied upon by any other persons or redistributed to retail clients in Hong Kong. In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N) for use only with institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore. In Taiwan, Independently operated by BlackRock Investment Management (Taiwan) Limited. Address: 28/F, No. 95, Tun Hwa South Road, Section 2, Taipei 106, Taiwan. Tel: (02)23261600. For recipients in China: This material may not be distributed to individuals resident in the People's Republic of China ("PRC", for such purposes, excluding Hong Kong, Macau and Taiwan) or entities registered in the PRC unless such parties have received all the required PRC government approvals to participate in any investment or receive any investment advisory or investment management services. In Australia, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL). This material is not a securities recommendation or an offer or solicitation with respect to the purchase or sale of any securities in any jurisdiction. The material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should therefore assess whether the material is appropriate for you and obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. BIMAL, its officers, employees and agents believe that the information in this material and the sources on which it is based (which may be sourced from third parties) are correct as at the date of publication. While every care has been taken in the preparation of this material, no warranty of accuracy or reliability is given and no responsibility for the information is accepted by BIMAL, its officers, employees or agents. Any investment is subject to investment risk, including delays on the payment of withdrawal proceeds and the loss of income or the principal invested. While any forecasts, estimates and opinions in this material are made on a reasonable basis, actual future results and operations may differ materially from the forecasts, estimates and opinions set out in this material. No guarantee as to the repayment of capital or the performance of any product or rate of return referred to in this material is made by BIMAL or any entity in the BlackRock group of companies.

In Canada, this material is intended for accredited investors and permitted clients only.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or a strategy. Capital at risk. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

This release will be for distribution in the US, for a retail audience.

© 2019 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylized i logo are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.


1 All figures mentioned throughout this release are sourced from BlackRock’s Global Rebalancing Survey, 2019.

2 Percentages may not sum to 100% due to rounding


Roland Leithaeuser - EMEA
+44 (0) 2077432544

Melissa Garville - AMERICAS

Cynthia Ng - APAC
+852 390 325 53


Roland Leithaeuser - EMEA
+44 (0) 2077432544

Melissa Garville - AMERICAS

Cynthia Ng - APAC
+852 390 325 53