Investors increase equity exposure to cope with longevity

Only 60% of professional investors are prepared financially for longer life cycles, with a high proportion, 40%, highlighting a lack of preparedness. New research from Fidelity International shows that more than half of investors expect to increase exposure to equities as a consequence. The study, developed with Crisil Coalition Greenwich, surveyed more 120 institutional investors and intermediary distributors across Europe and Asia. According to the World Health Organisation, the number of people aged 80 years or older is expected to triple between 2020 and 2050 to reach 426million. Katie Roberts, global head of client solutions at Fidelity International, said: “The global retirement challenge and the pension funding gap are not new, yet these issues continue to accelerate significantly, as populations are expected to live longer, and to some extent, be healthier and more active in retirement. “While the retirement challenge requires local solutions, what is clear is that state support overall is likely to be less going forward, with individuals becoming increasingly responsible for financing their retirement.” She said professional investors have a key role to play in providing their clients with relevant long-term solutions. When asked if there are currently enough products and solutions in the market addressing the needs of an increasing life expectancy, only 57% of professional investors agreed. Ms Roberts said: “This highlights an opportunity to further develop innovative financial solutions to alleviate any provision gaps.” The study showed that investors are leaning towards equities and private assets as a way of increasing the risk-return profile of their portfolios in anticipation of longer life expectancy for their clients. More than half of investors (55%) confirmed they expected to increase their exposure to equity, closely followed by private assets (52%) and fixed income (24%). Meanwhile, the survey pointed to potential decrease in exposure to multi-asset funds (28%), cash (26%) or fixed income (21%). Ms Roberts said: “Preparing for retirement remains complex, especially when considering the changing market environment, local specificities including regulation, pensions policy and frameworks, or age of retirement. She said investors must consider the difference between investing for retirement and investing in retirement which involves ensuring sufficient funding throughout the entire extended life cycle. Fidelity International engaged Crisil Coalition Greenwich to conduct a study on future investment trends among 125 institutional investors and intermediary distributors in selected countries in Europe and Asia. The research was conducted in October and November 2024.

Investors increase equity exposure to cope with longevity

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