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.
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.