Institutional investors cite inflation and geopolitical tensions as their top economic concerns for 2022, a survey from Commonfund finds.

Based on the responses of nearly 150 sophisticated investors, (endowments, foundations and charities, pension funds, insurance companies, family offices, registered investment advisors, and healthcare organizations), representing $170 billion in total assets, who attended the 24th annual Commonfund Forum held March 16-18, 2022, the survey found that 78 percent believe this year’s returns will be lower than average (compared with 58 percent last year). Regarding their own organizations, a majority of investors reported being “cautiously optimistic” (56 percent) about achieving target returns in the next 10 years, with 23 percent indicating that they are “very bullish” about their prospects and 20 percent indicating they are “feeling nervous.” Inflation (68 percent) and geopolitical tensions/Russia-Ukraine war implications (66 percent) represented investors’ most preeminent economic concerns.

According to the survey, investors largely expect private equity (70 percent) to deliver the best risk-adjusted returns over the next 12 months, followed by private real assets (41 percent), venture capital (37 percent), public equities (29 percent), private credit (19 percent), public real assets (13 percent), and cryptocurrencies (10 percent). In addition, the survey revealed that 31 percent of respondents stated that they had changed their portfolio allocations in the past year to be specifically aligned with environmental, social, and governance (ESG) considerations.

“The effects of geopolitical tensions are understandably leading investors to closely analyze the future of the global economy and what they mean for their portfolio allocations as the tragic conflict in Ukraine remains top-of-mind,” said Commonfund CEO and chief investment officer Mark Anson. “This concern, combined with persistent inflation and other connected factors such as rising interest rates and supply chain challenges, has led to a meaningful decline in investors’ expectations for stock market returns this year.”

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