Two ‘supertanker trends’ reshaping future asset allocation

Climate_changeClimate change and artificial intelligence (AI) are two “supertanker trends” that are reshaping future investing, according to a study by BNY Mellon Investment Management and CREATE-Research. The study, entitled “Future 2024: Future proofing your asset allocation in the age of mega trends”, looks at global investor perception of these two secular forces and their impact on approaches to asset allocation, as well as the solutions that are being promoted. The “supertanker trends” were identified by 89% of participating institutional investors – with combined assets under management (AuM) of $12.75 trillion – as investment risks. Some 93% who view climate change as an investment risk said it is yet to be priced in by all the key financial markets globally, while 85% highlighted societal backlash and geopolitical tension as potential consequences emanating from AI. Investors view both climate risk and AI as materially important factors, according to the study. “In response to the challenges arising from climate change, investors are factoring in the potential for draconian measures, ensuring they have intensive engagement with companies, increasing investment in green bonds and accepting ESG as a risk minimising tool,” BNY said in a statement on September 16, 2019. The study also highlighted the two “supertanker trends” as important factors in driving asset allocation. Private markets appear to be in favour going forward “as the search for uncorrelated absolute returns intensifies.” ©2019 funds global asia

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