North American Family Offices, Other Institutions Shrug Off Election Dramas – Survey

Editorial Staff

21 October 2024

A survey of 216 North American institutional investors, including family offices, found that almost two-thirds of them think that the US elections on November 5 are just short-term noise, and 73 per cent of them are invested in private markets.

Endowments and foundations are the keenest on private markets, with 80 per cent taking this view, according to a Global Investor Insights Survey from Schroders, the UK-listed wealth and investment firm.

The respondents, which are collectively in charge of $74.5 trillion in assets, were polled in June and July. Geographically, 114 of those polled are in the US, 92 are from Canada and 10 are in Bermuda. Across the whole global survey, 2,830 were surveyed.

Monetary policy and economic uncertainty are top-of-mind concerns in terms of institutional portfolio performance. North American institutional investors anticipate that central bank policy , high interest rates and the potential for an economic downturn will have the highest influence over clients and overall portfolio performance over the next 12 months. Inflation risk was also a key factor for 63 per cent of pension funds, as was geopolitics for insurance companies and endowments and foundations .

“Many institutional investors understand that the immediate impact the election has on the markets is temporary and that a well-informed, long-term view is crucial in constructing a resilient investment strategy. However, that still leaves nearly two in five institutions that are changing their risk profile, demonstrating that many anticipate long-term policy changes tied to the results,” Adam Farstrup, head of multi-asset, Americas, said. “We may not know the outcome of the election, the next turn in markets, or the next geopolitical surprise – however, building a broadly diversified portfolio meant to weather various market cycles and events is key to pursuing strong returns amid all economic concerns, known and unknown.”

Artificial intelligence
AI is beginning to make its way into institutions and their investment processes. A majority of North American institutions across segments have either a somewhat positive or very positive sentiment toward incorporating AI into their work, particularly within investment research and portfolio construction internally and for internal operational processes within an organization .

Despite this, not that many institutions have actually incorporated it. Only about a third have adopted AI for internal operational efficiency and for investment research and analysis . Additionally, nearly one in five North American institutions are not using AI but have plans to do so over the next one to two years.

Within the asset class, overall, respondents identified private equity and private debt as the top two areas where they would be increasing allocation over the next 12 months.

In addition to the energy transition, the survey also identified technology as a key theme driving private equity investment. Sixty-three per cent of respondents identified the technological revolution, defined as a period where new technologies are rapidly adopted and spread causing significant changes in society and the economy, as a theme or sector that they are seeking to proactively allocate to via private markets in the next one to two years.