The majority of insurers intends to back away from the low-yielding bond market and head into less liquid assets, as a burst of inflation since the outbreak of Covid-19 builds on longer-term pressures, according to a survey.
The study by investment consultancy bfinance found that 61 per cent of insurers intended to cut fixed-income allocations over the next year-and-a-half, while the same proportion planned to boost exposure to “unfamiliar” assets including emerging-market debt, private debt, private equity and infrastructure. The survey covers 90 insurers with more than $5tn in combined assets under management.
The shift away from low-yielding public debt and into more specialised and generally more opaque markets highlights the inflationary pressure long-term investors are facing while consumer prices are rising at their fastest pace in the US in almost 40 years.