Investors’ appetite for risk is growing

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More than half of institutional investors (56per cent) have increased their appetite for risk over the past quarter, according to the latest Risk Rotation Survey by ING Investment Management International (ING IM).

Meanwhile, only 11per cent of investors stated that they had decreased their risk appetite in Q4, a fall from 18per cent three months earlier.

Furthermore, this willingness was reflected in attitudes to asset classes, with appetite for equities rising further amongst investment professionals (73 per cent sees it as favourite asset class); an increase from 64per cent in Q3. Property came in second at 45per cent, up from 34per cent over the same period.

In terms of the greatest threats to investment portfolios, the removal of quantitative easing and interest rate rises are causing the most concern, with one in five (19per cent) respondents citing them as a “very significant” factors.

The Eurozone crisis also remains high on the agenda of institutional investors with 37per cent citing it as a concern. This compares favourably to the previous quarter when 54per cent said the same.

Institutional investors are showing growing confidence in Japan with 60 per cent of respondents stating that Abenomics would be effective in reviving the world’s third-largest economy, compared to 37per cent in the previous quarter. Only five per cent of respondents believed it would be ineffective or damaging versus 16per cent in Q3 of last year.

Commenting on the findings, ING Investment Management’s head of strategy multi-asset, Valentijn van Nieuwenhuijzen, said: “An increase in risk appetite among investors is a promising sign as we head into 2014.

“With over half of respondents saying their appetite had increased over the past six months, it indicates investors are feeling more positive about the global economy.”