Institutional investors with knowledge gaps

In an Axa Investment Managers study, institutional investors certify themselves, at best, only a satisfactory knowledge about alternative debt. Asset managers should explain the topic with their years of experience.

63 percent of surveyed investors evaluate their knowledge about alternative debt such as infrastructure investments or commercial real estate loans as satisfactory or even worse. Especially foundations are very critical with respect to their knowledge and assess themselves an average grade of only 3.6. Insurers (2.7), pension funds (2.8) and corporates (2.8) are more confident about their skills and knowledge, shows a study commissioned by Axa Investment Managers surveying 141 experts and decision makers of institutional investors with assets under management of 662.6 billion Euros in total.

“The results of this study show how important it is for asset managers with extensive experience to enlighten investors,” says Jörg Schomburg, Head of Institutional Sales at AXA IM. “On the one hand, this helps to eliminate misunderstandings that hinder successful investments. On the other hand, it provides competent asset managers with the opportunity to differentiate themselves through good advice from their competition.”

Institutional investors see the greatest need for advice with respect to the general market environment, the creation of individual investment solutions and the topic of alternative debt under Solvency II. Regulatory requirements are not only a field with high demand for advice but are also a significant entry barrier to the area of alternative debt. Regulatory knowledge is thus an essential requirement for institutional investors when selecting an asset manager and seen as important or critical by 86 percent of survey participants. Only expertise in credit analysis (94%), in documentation and reporting (90%) and a long track record (87%) were more significant.