EUROPE - Institutional investors in Europe rank interest rate risk as their biggest concern over the next 12 months, research by Allianz Global Investors shows.
Overall, nearly 70% perceive interest rates as a huge or considerable risk to their ability to achieve their investment targets. This was closely followed by sovereign debt concerns, with 61% of respondents regarding it as a considerable or huge risk.
AllianzGI's inaugural RiskMonitor survey said once, these results would have indicated a shift into equities. However, concerns about overall market volatility and fear of a sharp drop in equity markets are also seen as major risks.
"The variety and the impact of financial as well as regulatory risk have multiplied since the financial crisis", said AllianzGI Europe chief executive officer Elizabeth Corley.
"There is not only a multitude of types of risk facing institutional investors but investors also now perceive risk as a systemic issue because of the potential for increasing interrelation. In this context, it is interesting to note that there is so much confidence in the stability of the Euro."
The survey found 76% of institutional investors in Europe believe the Euro will survive under the current circumstances, whilst only 6% disagree.
It added capital markets had changed dramatically since the outset of the financial crisis and so had the perception of risk, calling for a new framework for risk management.
"We have to shift from a backward-looking static framework based on a normal distribution to a forward-looking dynamic risk management framework that explicitly accounts for empirical facts such as fat tails and correlation breakdowns," said Reinhold Hafner, chief executive officer of AllianzGI subsidiary, risklab.
"Active and dynamic risk management strategies that go beyond pure diversification will become ever more important."
When asked about regulatory and governance issues, stricter regulation or rising reporting requirements ranked as the highest potential risk, but were only seen as a major risk by 29% and 20% of institutional investors respectively.
"The RiskMonitor survey shows that institutional investors in Europe trust the framework they are operating in and are generally confident of their ability to cope with the challenges in this space", added Corley.
The proposed cold-calling ban may be ineffective if a collaborative regulatory approach between the UK and the European Union (EU) is not maintained post-Brexit, the Pensions Management Institute (PMI) has warned.
Some 56% of defined contribution (DC) asset managers do not believe they will have transaction cost information in time for pension funds' March year-end statements, according to Lane Clark & Peacock (LCP) research.
NEST has appointed Clive Elphick, Martin Turner, Mutaz Qubbaj and Chris Hitchen as trustee members of its reshaped board.
Most people want to avoid investing in projects that contribute to climate change, and would consider moving to another less-exposed provider, according to a survey commissioned by ClientEarth.