Interview
What’s on the Minds of CIOs
- CIOs target annual returns between 6% and 8% to cover benefit payments and support operations while positioning portfolios for a five- to 10-year horizon despite near-term risks.
- A broad consensus anticipates market volatility surrounding the upcoming election, with concerns that a contested outcome could extend volatility into 2021.
- To mitigate election-related risk, CIOs plan to utilize derivatives and hedging strategies, potentially executing these within their own portfolios or by engaging external asset managers.
- Quantitative equity groups have identified specific U.S. election factors to screen for companies sensitive to election outcomes in both positive and negative directions.
- CIOs increasingly expect asset managers to possess rigorous processes for assessing, measuring, and reporting on ESG risk across all asset classes.
- Manager diversity and inclusive cultures are viewed as critical components of investment strategy evaluation, expected to drive decision-making quality and act as alpha generators.
- The market is shifting toward integrating diversity and inclusion diligence across all strategies by broad asset managers, moving beyond traditional carved-out allocations.
- Assets relying on ESG data have doubled over the past four years and tripled over the past eight years, reaching a global total of over $40 trillion.
- The pandemic has elevated climate change and carbon conversion risks as primary considerations for CIOs.
- Private assets, including private equity, private credit, and private real estate infrastructure, are anticipated to provide current yield or target returns ranging from mid-teens to approximately 20%.
- Public equity portfolios are being adjusted to maximize returns while minimizing risk exposure in the current environment.