Monday 7 January 2019 1:16 pm

Asset managers to move away from equities in 2019 amid fears of economic downturn

Funds are set to cut their exposure to equities in 2019 as worries grow about a downturn in the economic cycle, a new survey showed.

Over half of clients surveyed by asset manager Blackrock described the economic cycle turning as one of the most important macro risks influencing where they put their money in 2019.

In response over half (51 per cent) of the 230 institutional clients said they planned to decrease their allocation to public equities this year.

This shift is accelerating with 35 per cent of those surveyed planning a reduction in 2018 and 29 per cent in 2017.

Private markets are taking up the slack with 54 per cent of clients planing to increase their exposure to real assets, 47 per cent to private equity and 40 per cent to real estate.

“As the economic cycle turns, we believe that private markets can help clients navigate this more challenging environment,” said Edwin Conway, head of Blackrock’s institutional client business.

“We have been emphasising the potential of alternatives to boost returns and improve diversification for some time, so we’re not surprised to see clients increasing allocations to illiquid assets, including private credit.”