In the face of rising interest rates, war in Ukraine and other macro risks, investors in endowments, foundations and healthcare maintain a view of risk and plan to increase their allocations in private equity this year, according to a survey by black rock and Coalition Greenwich, a division of S&P Global’s CRISIL analytics business.
“Inflation and other macroeconomic risks were already a concern before the war, and the geopolitical environment has accentuated these risks, as expected,” said Lili Forouraghi, managing director and head of US endowments and foundations at BlackRock. “Sentiment has continued to trend negatively, but given the long-term horizons of these endowment, foundation and healthcare clients, they are staying the course by looking for the performance of their portfolios, (while) also seeking to build resilience, diversification and portfolio advantage from market dislocations.”
Investors favored real estate, public stocks, inflation-linked bonds and natural resources to face inflation. Meanwhile, they like value stocks, real estate and floating rate debt to position portfolios for rising rates, according to the survey.
The online survey of 87 US-based institutional investors was conducted this spring and included 31 endowments, 31 foundations and 25 health care systems who answered 38 questions.
However, almost half of the institutions surveyed said they were focused on generating “idiosyncratic returns” and most believed that private equity would help them achieve this.