Asset Owners Prepare for Stagflation

Institutional investors are preparing their portfolios for stagflation, with differing approaches.

In a CoreData Research survey of 202 global institutional investors, 51 percent of respondents said the surge in energy prices coupled with the Russia-Ukraine war will send the global economy into stagflation — a period characterized by high inflation, slowing economic growth, and high unemployment. In response to these fears, 43 percent of respondents said they plan to raise allocations to assets positively correlated to inflation, including commodities and real estate. 

The survey, which was conducted in April 2022, included respondents from corporate and public pension plans, insurance companies, endowments, foundations, and other “official” institutions. 

According to additional data provided to Institutional Investor, the response to stagflation fears varied regionally. In North America, just 31 percent of respondents said they planned to raise allocations to assets linked to inflation, compared to 43 percent of global respondents. Meanwhile, CoreData said 49 percent of European respondents intended to seek out inflation-sensitive assets, the highest across all regions.

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