Hong Kong, 25 May 2020 – Two thirds of Asset owners across the world are worried about how to protect their funds from further market turmoil, and how to generate the returns they need. About 40% of respondents in Asia Pacific are concerned with maintaining adequate liquidity according to a Willis Towers Watson survey of global pension schemes.
The survey of over 180 asset owners (pensions, endowments, and sovereign wealth funds) found that while 50% were not currently taking any action to address falls in asset values, 47% were considering extending their time horizons to reach their investment goals, with only 12% saying additional cash was the answer. In Asia Pacific, one third of the respondents said they would reduce future spending plans.
As a result, the majority of funds will be relying heavily on their investment portfolios to achieve their goals over the long term, emphasizing the urgency for fiduciaries to ensure they have a robust portfolio construction process in place.
Respondents also highlighted a number of governance challenges that they are currently facing. Around 80% indicated they are struggling with making decisions in this uncertain environment, while half said that strategic initiatives had been delayed, and 32% are struggling to find enough time and resources to dedicate to pension issues.
Paul Colwell, Head of the Advisory Portfolio Group, Asia at Willis Towers Watson, said: “Looking at the responses, it seems like there is a real fear that governance has been impaired and investment portfolios may be negatively impacted as a result.”
Willis Towers Watson has set out three priorities that asset owners should address to ensure their funds remain on track even in this highly uncertain market environment:
“Asset owners across Asia are in the midst of the biggest financial crisis since 2008, and with both advanced and emerging economies heading into recession, future prospects are far from clear. To address this challenge, and emerge stronger post COVID-19, fiduciaries should immediately review their strategies and focus on diversifying their portfolios away from a heavy reliance on equities towards more liquid alternatives, such as hedge funds. In doing so, asset owners will be able to shield their portfolios better from future market turmoil and quickly adapt to a volatile economic environment that is becoming more unpredictable by the day,” added Paul.
The online survey of 183 asset owners worldwide, including 45 in Asia Pacific, was conducted between 27 April and 15 May 2020.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving in more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.
