Survey: Coronavirus 'impacting on majority of institutional investors' activity'

The majority of institutional investors say the coronavirus outbreak is already having an “impact on their investment activity”, according to new research.

Posted mercredi, mars 18 2020
Survey: Coronavirus 'impacting on majority of institutional investors' activity'

The survey, by capital placement agent and fund advisory firm Eaton Partners, also found that many institutional investors “doubt the US government’s ability to effectively combat the crisis".

The survey of 69 leading limited partners (LPs) was conducted in the last two weeks.

The key findings were:

  • 70 per cent of LPs say the coronavirus outbreak is having an impact on their investment activity and/or planning for 2020

  • Coronavirus (29 per cent), market valuations (29 per cent), and a potential US recession (33 per cent) are the factors respondents believe will have the most significant impact on their near-term investment strategy

  • Only 13 per cent are “very confident” in the US government’s ability to contain and eradicate coronavirus, while 49 per cent are “somewhat confident” and 38 per cent are “not confident at all”

  • Most (70 per cent) believe interest rate cuts by the US Federal Reserve are not an appropriate remedy to the coronavirus crisis because the problem is biological, not financial, in nature

  • Despite the apprehension, 78 per cent say they will not reduce or pull capital out of specific geographic regions because of coronavirus

  • Three-quarters (75 per cent) admit they’ve made changes to their business activity as coronavirus fears intensify, including less travel and more phone calls and videoconferencing.

Peter Martenson, partner at Eaton Partners, said: “While there are many unknowns, our recent interactions with global institutional investors regarding the fluid social, business, and macro-economic environment, have yielded an interesting response. There’s a general feeling that private equity could be a well-positioned, steady-hand investor during the recent coronavirus-induced volatility. In fact, our survey found that 52 per cent of investors believe private equity is the most appealing alternative asset class going forward, on the heels of lower interest rates, falling valuations, and more clarity in the presidential race.”

Since its foundation in 1983, Eaton Partners has participated in raising over $100 billion of institutional capital across more than 145 investment funds, including private equity, private credit, real estate, real assets and hedge funds.