Wealth managers are expecting their organisations’ allocations to fixed income to “surge” over the next 18 months after a period of being underweight, according to research from Managing Partners Group (MPG).

It found that more than half (57 per cent) of wealth managers and institutional investors believed their current allocation to fixed income was underweight, 26 per cent said it was ‘about right’, and 17 per cent felt their allocation to fixed income was overweight.

MPG stated that this looked “set to change” as the prospects for fixed income returns were “strong”, with bond yields at their highest level since the financial crisis.

Almost all (99 per cent) wealth managers and institutional investors expected their organisation’s allocation to fixed income to increase over the next 18 months.

The study found that 10 per cent said their exposure would rise by up to 10 per cent, 66 per cent said the increase would be between 10 and 15 per cent, and 23 per cent believed it would rise by more than 15 per cent.

“Fixed income funds have seen increasing inflows recently and this new research shows that institutional investors and wealth managers are set to significantly increase allocations over the next 18 months,” commented MPG chief executive officer, Jeremy Leach.

“Particularly as we enter a period of high volatility, the benefits of diversification and a regular income means fixed income is an increasingly popular choice for institutional investors and wealth managers.”

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