Tangible assets are becoming increasingly popular with large investors such as insurers or pension funds. As a study by Aviva Investors now shows, they want to invest more in real assets over the next twelve months.
Real estate is at the top of the wish list
The study was based on the responses of over 1,000 decision-makers at insurers and pension funds, who have assets under management of around two trillion euros. When asked what changes they plan to make to their real asset allocation, 49 percent of insurance companies and 37 percent of pension funds said they wanted to increase their investments.
One of the main reasons for this strategy by insurers and pension funds is concerns about financial instability. 44 percent of the insurers and 36 percent of the pension funds said that they classify this as worrying. These concerns were particularly high among North American insurance companies.
ESG criteria in the focus of institutional investors
Sustainable investments based on ESG criteria are becoming increasingly important to insurers and pension funds. Around 60 percent of those surveyed see the implementation and transparency of the ESG criteria as the most important task of asset managers. Here, insurers and pension funds concentrate primarily on the areas of health and social housing.
Both groups also agree on environmental criteria. One focus here is on investments that have a positive impact on the environment and reduce CO2 emissions. For this reason, 58 percent of insurers and 48 percent of pension funds prefer to invest in energy-efficient real estate. In Asia in particular, the focus of insurance companies is on climate-friendly assets.
Melanie Collett, Managing Director of Aviva Investors, Asset Management, Real Assets, says: “We focus on the equipment of a building, health and well-being, air quality, ESG components, energy efficiency and the revitalization of the room. Technology will be part of it, but bringing people back into a common environment and using and designing the space may have overtaken the smart tech approach. “
Overall, 92 percent of insurers and pension funds said they had plans to become more climate-friendly or to already implement this.
When will the economy return to 2019 levels?
Another point of the survey was when the economy can be expected to return to 2019 levels. The North American pension funds in particular are optimistic here and are anticipating this as early as the beginning of 2022. On average, however, most respondents do not expect a recovery until the end of 2022 or the beginning of 2023. The Europeans are particularly pessimistic, because insurers in particular do not expect a recovery until the middle 2023.
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