Schroder "Flexible Asset Allocation and Capturing Growth Opportunities... Helping Clients Achieve 'Alpha Returns'"

Schroder Investment Management announced on the 3rd that global wealth, pension funds, and insurance companies plan to expand their portfolio allocations based on the potential of the private market, and that active asset management is becoming increasingly important in response to market changes.

Previously, Schroder forecasted continued growth in investments in the private market. According to the Schroder Global Investor Insight Survey 2024, over 80% of investors responded that they are "already investing in or planning to invest in the private market." Schroder regarded institutional investors and high-net-worth individuals as key components of private market portfolios, analyzing that this is due to the high returns and effective portfolio diversification they offer.

In particular, financial advisors and asset managers identified the top three private asset classes expected to see increased client allocations over the next 1-2 years as ▲private equity (53%) ▲multi-private asset solutions (47%) ▲renewable energy infrastructure equity (46%). Among the responding asset managers and financial advisors, about 66% emphasized the private market’s advantage of having the potential to generate higher returns than the public market.

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Carla Bergareche, Head of Global Asset Management at Schroder Client Group, said, "Many asset managers and financial advisors are already investing in the private market for their clients, but the allocation size is much lower compared to family offices and institutional investor portfolios." She added, "This gap indicates significant room for clients to deepen their involvement in the private market in the future. Our management team expects the role of the private market in asset management portfolios to continue growing."

The survey showed that over 94% of pension funds are already investing in or planning to invest in the private market, and 27% intend to invest or plan to invest within the next two years. Pension funds are focusing on private debt (51%), private equity (49%), infrastructure debt (41%), and renewable energy infrastructure (38%). Energy transition, decarbonization, and technological revolution are key themes driving pension funds’ demand in the private market. About 93% of pension funds are already investing in or planning to allocate assets to the energy transition theme, and more than one-third intend to make new investments in this area within the next 1-2 years.

Among the insurance companies participating in the survey, more than half (56%) expected to increase their allocation to global equity products within the next two years. Forty percent said their weighting in active equities would increase. Forty-six percent of insurers are seeking customized solutions to increase their private market allocation, and 95% predict expanding their private market allocations within two years.

Ingo Heinen, Head of Global Business Development and Products at Schroder Capital, explained, "A supportive regulatory environment means that more insurers worldwide will have greater opportunities to utilize the private market. The private market offers exclusive opportunities for insurers to prepare their reserves in an environment of heightened volatility and inflationary pressures."

A Schroder Korea representative said, "The responses from wealth, pension funds, and insurance companies emphasize the importance of flexibility in asset allocation and opportunities for growth across various regions and sectors. A strategic shift toward active management is necessary, and Schroder plans to help clients achieve alpha returns through active asset management aligned with this trend."

The survey included 1,755 global asset managers and financial advisors, 420 pension funds from 26 regions worldwide, and 205 insurance companies from 23 regions. The assets under management by these participants amount to $12.1 trillion (approximately 16,969 trillion KRW), $13.4 trillion (approximately 18,786 trillion KRW), and $11.7 trillion (approximately 16,403 trillion KRW), respectively.

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