Investors are increasingly turning to active management in response to the ongoing economic uncertainty and market volatility, according to Schroders’ Global Investor Insights Survey (GIIS).

This movement towards active management is occurring as investors look to strengthen the resilience of their portfolios and capture specific investment opportunities.

The survey of institutional investors and wealth managers found that 80 per cent were ‘somewhat’ or ‘significantly’ more likely to increase their use of actively managed investment strategies in the year ahead.

Trade tariffs were identified as the biggest macroeconomic concern, cited by 63 per cent of respondents, more than six times as many as the next highest perceived risk.

This trade uncertainty likely drove investors’ strong focus on portfolio resilience over the next 18 months, which was selected by 55 per cent of respondents as their top priority for portfolios.

Of those prioritising portfolio resilience, 82 per cent were increasingly looking to harness active management.

Capturing investment opportunities (52 per cent) and building portfolio resilience (48 per cent) were the top attributes investors were looking for from their active fund managers.

“Active management is indispensable amid today’s fragmented markets,” commented Schroders group chief investment officer, Johanna Kyrklund.

“With four in five investors set to increase their allocation to actively managed strategies this year, it’s clear they value a selective and adaptable approach.

“The wider backdrop is that financial markets are still adjusting back to structurally higher interest rates, made painful in many cases by high levels of debt. This is raising questions about future market trends and the value of passive approaches in a period of greater uncertainty.

“Resilience now tops the investment agenda, as the rising tide no longer lifts all boats. In this environment, active strategies provide the control investors need to manage complexity, create portfolio resilience and seize opportunities.”

Public equities (46 per cent) and private equity (45 per cent) were the preferred asset classes for return generation amongst investors in the current environment, according to the report.

More than half (51 per cent) of those who believed public equities would deliver strong returns felt global equity allocations would provide the strongest performance.

Schroders said this shift highlighted a growing conviction in reducing concentration risk and diversifying away from US mega caps, with 74 per cent identifying the S&P 500 as the index giving investors the greatest cause for concern about market concentration.

Over half (53 per cent) of investors focused on public equities favoured active strategies, compared to 10 per cent preferring passive approaches.

In private equity, small-to-mid cap buyouts were seen as compelling by 65 per cent of investors, which Schroders said reflected a pivot towards high-conviction investments with transformative growth potential that were more likely to be insulated from global trade tensions.

"Investors are increasingly focused on resilience,” said Kyrklund. “They are seeking strategic returns through diversified global equities and specialist, conviction private equity.

“Meanwhile their search for income is evolving, with greater emphasis on multi-channel, risk-adjusted sources like infrastructure debt and securitised credit.

“In this context, it is clear why investors are turning to active management and a blend of public and private markets.”

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