What’s top of mind for investment managers today?
There’s clearly a lot to consider. On the positive side, economies are holding up (for now). Company profits seem resilient, interest rates may have further to fall, markets have been making all time highs. But on the other hand, there is unprecedented uncertainty around issues like trade and huge geo-political risk, not to mention active conflicts in Europe and the Middle East.
How are investment managers making sense of it all?
Two recent pieces of research give us a glimpse into what’s dominating investor views and actions. One is a Morningstar survey of Pension funds, Chief Investment Officers , Sovereign Wealth Funds and others around the world. The other is a very useful report from the Central Bank of Ireland on how Irish investment funds have been responding to recent events.
Morningstar surveyed 500 investment managers around the world.
The biggest single issue for the world’s investment managers is what’s happening with global trade and the potential economic and asset fall-out. 76% of investment managers see this as the key concern. In China it’s the key concern for almost 100% of all respondents.
How the US Administration develops and implements overall policy is also high on the agenda for those managing the world’s financial assets. For many, these concerns morph into topics such as market volatility and the future of the US dollar. While other issues such as fiscal debt or Ukraine and the Middle East are on managers’ checklists, they are further down the list and currently seen as manageable.
Presumably Irish investment managers assess the financial environment similarly.
So have they taken any action on foot of these concerns over the volatility and impact of US trade policy?
The Central Bank of Ireland has done solid work in looking at how the Irish financial sector responded to the sudden increase in US economic policy uncertainty in April 2025. Their conclusion is that investment funds, banks, insurance companies and pension funds did not significantly reduce their exposure to US assets over this period. There is however some evidence of increased currency hedging activity by the Irish financial sector as they looked to protect against any dollar weakness in the light of higher uncertainty. As we look to further interest rate cuts from the US Central Bank, such hedging decisions will continue to matter.
Is ESG currently still on the agenda for investment managers? This also emerges in the Morningstar survey. More than half of the asset owners surveyed believe sustainability factors have become more material in their business in the past 5 years. Regionally, Asian managers have seen the biggest growth, (with China topping the table), followed by Europe.
Perhaps not surprisingly the views on issues such as sustainability or inclusion in the US remain sharply divided. Significantly less than half the asset owners in the US see growing interest in sustainability related investment. The stance and statements of the Administration, revised mandates from many public sector funds, and the views of key players in asset management have all played a role in getting to here. We are unlikely to see any reversal of this trend in the US soon.
In sum then, what happens in the US as regards policy and politics, both internally and externally, is what’s capturing the world’s investment managers’ attention today.
Tradewinds 