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Commonfund Survey Finds Institutional Investors Increasingly Cautious Amid Heightened Economic Risks

March 29, 2022 |
3 minute read
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Institutional investors representing $170 billion in total assets cite inflation and geopolitical tensions as top economic concerns for 2022

Majority of investors expect lower-than-average U.S. stock market returns and outperformance from private equity over the next 12 months

WILTON, CT, March 29, 2022 — Commonfund, a prominent investment manager for institutional investors, today announced the results of its survey featuring market sentiments from nearly 150 sophisticated investors, (representing endowments, foundations and charities, pension funds, insurance companies, family offices, RIAs and healthcare organizations) in attendance at the 24th annual Commonfund Forum, held in-person in Orlando, Florida and streamed virtually from March 16-18, 2022. Importantly, Forum 2022 was a carbon neutral event with 606 tons of CO2 emissions being offset with carbon credits through investments in carbon reducing projects.

The survey results, which were collected at the in-person event, underscored central Commonfund Forum discussion themes, including the uncertain future of the global economy, diversity, equity and inclusion (DEI) and good governance, and the importance of investment opportunities in private capital.

When asked about their expectations for U.S. stock market returns in 2022 versus the 10-year average annual return for the S&P 500 Index, 78 percent of investors believe this year’s returns will be lower than average, an increase from last year, when 58 percent of investors believed this would be the case. 14 percent of investors expect returns to be about the same, while only 3 percent expect that they will be higher. Inflation (68%) and geopolitical tensions/Russia-Ukraine war implications (66%) represent investors’ most preeminent economic concerns this year.

“The effects of geopolitical tensions are understandably leading investors to closely analyze the future of the global economy and what they mean for their portfolio allocations as the tragic conflict in Ukraine remains top-of-mind,” stated Mark Anson, CEO and CIO of Commonfund. “This concern, combined with persistent inflation and other connected factors such as rising interest rates and supply chain challenges, has led to a meaningful decline in investors’ expectations for stock market returns this year.”

Regarding their own organizations, the majority of investors are “cautiously optimistic” (56%) about achieving target returns in the next ten years, with 23 percent indicating that they are “very bullish” about their prospects. 20 percent of respondents noted they are “feeling nervous.”

“We were encouraged that the investors surveyed largely share our view at Commonfund, which is that remaining committed to one’s organization’s policies and long-term investment practices will ultimately yield to fulfilling mission goals, even amidst market disruptions,” Anson added. “Capturing the unique investment opportunities in the current environment, particularly in private markets, will also remain critical as investors look to achieve their return targets.”

Additional Survey Findings Include:

  • Investors indicated they largely expect private equity (70%) to deliver the best risk-adjusted returns over the next 12 months. This was followed by private real assets (41%), venture capital (37%), public equities (29%), private credit (19%), public real assets (13%) and cryptocurrencies (10%), among other asset classes.
  • Nearly a third (31%) of the investors surveyed stated that they have changed their portfolio allocations in the past year to be specifically aligned with environmental, social and governance (ESG) considerations.

This year’s Commonfund Forum convened roughly 330 investors from the U.S., Canada and the Caribbean for a three-day conference that explored important, timely themes driving strategic policy decisions, and delivered thoughtful analysis and tactics to support and sustain the missions of the attendees’ organizations. This year’s program was centered on the theme of “Imagine What’s Next,” with keynotes, panels and breakout sessions discussing the forces and trends influencing the current market for institutional investors and the opportunities available lying ahead. Featured speakers included: Sue Herera, Anchor at Large, CNBC; Dr. David A. Thomas, Commonfund Trustee & President, Morehouse College; Ian Bremmer, President & Founder, Eurasia Group and GZERO Media; and Robin Ely, Diane Doerge Wilson Professor of Business Administration, Harvard Business School, among many others.

About Commonfund
Commonfund was founded in 1971 as an independent asset management firm with a grant from the Ford Foundation. Today, Commonfund provides investment solutions to sophisticated investors through two affiliates. Commonfund Capital is a global private capital manager with over 30 years of experience offering a full suite of private investment strategies to sophisticated investors, both nonprofit and for-profit; and Commonfund Asset Management Company provides outsourced CIO services designed for nonprofit institutions using investment sub-advisers for discretionary and non-discretionary engagements. www.commonfund.org.

All securities are distributed through Commonfund Securities, Inc., a member of FINRA.

 

Media Contacts  

Tony Ialeggio
Commonfund
203-563-5121
tony.ialeggio@commonfund.org

Emily Roy
Prosek Partners
646-818-9232
pro-commonfund@prosek.com

 

Commonfund Institute

Author

Commonfund Institute

Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.

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